admin
Martin Kadzere
Government intends to raise $60 million this year from the local market to fund immediate infrastructure requirements for the National Railways of Zimbabwe.
While the struggling state-owned rail operator is already negotiating for a $216 million investment deal with Diaspora Infrastructure Development Group/Transnet Consortium, reaching financial close would take time, according to Zimbabwe’s Infrastructure Plan for 2019.
The plan focuses on projects with capacity to meet service delivery objectives of the country’s Transitional Stabilisation Programme.
Transnet, which made the bid jointly with Diaspora Infrastructure Development Group, a consortium of Zimbabwean investors living abroad, agreed two years ago to invest in NRZ.
“Already negotiations are underway,” revealed the 2019 Infrastructure Investment Plan.
“Reaching financial closure under the arrangement will take time and hence Government will assist NRZ to mobilise funding from domestic market to allow the parastatal address some of the current challenges.” Fresh funding will help NRZ to expand existing network, taking advantage of new economic activities in and outside the country.
As an interim solution to addressing NRZ’s operational challenges, the company is leasing 13 locomotives, 200 wagons and 34 passenger coaches from Transnet.
This is meant to boost capacity as NRZ’s cargo and passenger volume had drastically dropped.
The railway firm used to be one of the largest employers in Zimbabwe, but its fortunes waned after an economic decline between 2000 and 2008 that saw the country’s gross domestic product falling by an estimated 40 percent.
The NRZ’s rail network, which connects all major mines, heavy industrial plants and collections points for farmers requires at least $2 billion to rehabilitate and upgrade the railway network, signaling and communications equipment and the rolling stock.
It is among parastatals that the Government intends to restructure through partial or full disposal of its shares. The government has already invited bids from investors willing to acquire its stake in companies including Air Zimbabwe, which has been struggling as a result of operational challenges and a huge debt burden of $300 million. The Government is also disposing of its shares in telecommunication companies—NetOne, TelOne and financial services group POSB.
Infrastructure investment Plan
The plan is a step-change in Government’s approach to the planning and delivery of infrastructure, with ambition of gradually increasing the share of capital budget to above 20 percent, while exploring financial model such as PPPs.
As part of the measures to create fiscal space, all projects with capacity to generate cash flow will be funded from the market, with Government providing enabling investment climate that crowds in private sector. The plan also prioritises recovery of services from existing infrastructure, through maintenance. That will help optimising the value and asset life while reducing rehabilitation needs.
This will be complemented by measures that ensure value for money throughout the project life cycle such as building and developing capacity to deliver projects by both public and private sector.
Through the plan, the government will invest in project preparatory activities to ensure a robust pipeline of bankable projects for investors, consistent with Public Investment Management Guidelines.
Bongani Ndlovu