malvernmugadzikwa
Business Weekly/NewZiana
The Zimbabwe National Road Administration (ZINARA) said on Tuesday it had re-negotiated better terms for the remaining US$165 million loan secured from the Development Bank of Southern Africa (DBSA) for the rehabilitation of the Plumtree – Harare – Mutare highway.
The road authority had stopped servicing the loan, originally US$206 million, due to non-availability of foreign currency, and other factors such as dwindling collections from tollgates.
As a result, penalties kicked in, making the loan expensive, and over-ran the original 10-year repayment period to May this year.
ZINARA finance director, Adam Zvandasara, said the loan tenure had been extended by five more years, and interest cut from 6.18 percent to five percent.
“From about third quarter of 2020, we went into negotiations with DBSA to restructure (the loan) so that we reduce the interest costs that we felt were too high, and also so that we get a repayment period which was satisfactory according to our cash flows,” he said.
“By January 2021, we had agreed on the key clauses and they signed that new term sheet to be effective 1 April 2021, but from that time up to end of January 2022, it has been the lawyers now looking at the small print of the agreement,” he added.
But Zvandasara said the deal was dependent on the agreement of other key stakeholders, including the Ministries of Finance and Transport, and the central bank.
“At the beginning of February (this year), we got what we call an execution copy which means we have agreed on everything, so right now our principals (the Ministry of Finance, Ministry of Transport, the Attorney General, and the Reserve Bank of Zimbabwe) are looking at it and we trust that our principals should be able to sign this new agreement which is 15 years to pay and interest reduced from what it was to five percent.
The interest used to be 6.18 percent but because of the arrears situation, we were actually paying two percent more which meant the interest was really 8.18 percent all this while from 2016 (when arrears started building up). The loan was supposed to be fully repaid in May 2022,” he said.
“We are certainly confident that we will meet the new terms, we actually hope to be able to pay it earlier than the fifteen years so that we can free our cash flows to other priority areas. We are not going to be borrowing to pay another borrowing, the money is going to be raised entirely from current collections primarily transit fees and fuel levy.
The government has graciously allowed us to ring-fence these two income streams so they will not be used for anything else, not for Zinara, not for any government need, but they are ring-fenced for the sole purpose of re-paying the DBSA loan,” Zvandasara said.
“The total that we are looking at from the two income streams, on an annual basis is about US$40 million, but that is gross because you have collection costs which we let off then, so roundabout US$36 million is what then becomes available for DBSA.”
The ZINARA/Intertoll tolling deal came after the completion of the construction of the 880 kilometre highway, probably the biggest road investment undertaken by the Government in nearly 40 years, by Group Five of South Africa-now under liquidation.
Group Five owns Intertoll.
The scope of works on the rehabilitation of the highway, which started during the inclusive Government era between Zanu-PF and two MDC formations, involved 50 percent resealing, 29 percent shoulder widening and surfacing (7m to 10m), 21 percent reconstruction in some sections and 9 percent state-of-the-art toll gates installation.
Following the construction of the road, ZINARA and Intertoll formed Infralink under a 70/30 shareholding arrangement respectively to manage 10 tollgates along the highway to contribute towards loan repayment, road maintenance among other things.
Bongani Ndlovu