NRZ RECAPITALIZATION PROGRAMME: ADDRESS BY THE MINISTER DR. J. McD. GUMBO, MP

ADDRESS BY THE MINISTER OF TRANSPORT AND INFRASTRUCTURAL DEVELOPMENT

DR. J. McD. GUMBO, MP

BULAWAYO 21^ST FEBRUARY 2018

• YOUR EXCELLENCY THE PRESIDENT OF THE REPUBLIC OF ZIMBABWE – CDE E. D. MNANGAGWA
• HONOURABLE VICE PRESIDENT OF THE REPUBLIC OF ZIMBABWE – RTD. GEN. DR. CHIWENGA
• HONOURABLE VICE PRESIDENT OF THE REPUBLIC OF ZIMBABWE – CDE MOHADI
• MINISTER OF STATE FOR PROVINCIAL AFFAIRS FOR BULAWAYO METROPOLITAN PROVINCE – HON. A. MASUKU.
• CABINET MINISTERS HERE PRESENT
• GOVERNOR OF THE RESERVE BANK OF ZIMBABWE – DR. J. MANGUDYA
• CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON TRANSPORT AND INFRASTRUCTURAL DEVELOPMENT– HON. – CHITINDI (MP).
• YOUR WORSHIP THE MAYOR OF BULAWAYO – CLR. M. MOYO AND COUNCILLORS HERE PRESENT.
• PERMANENT SECRETARIES HERE PRESENT.
• NRZ BOARD CHAIRMAN (MR L.D. MAVIMA) AND BOARD MEMBERS.
• CHAIRMAN OF THE DIASPORA INFRASTRUCTURE DEVELOPMENT GROUP (DIDG) – MR D. CHIMHANDAMBA AND BOARD MEMBERS.
• TRANSNET GROUP CEO (MR. S. GAMA) AND COUNTRY MANAGER FOR ZIMBABWE (MR F. NDLOVU).
• EXECUTIVE DIRECTOR, SOUTHERN AFRICA ASSOCIATION OF RAILWAYS – MR B. BOTANA- AND CEOs FROM OTHER RAILWAYS IN THE REGION.
• NRZ GENERAL MANAGER – ENG. MUKWADA; NRZ MANAGEMENT AND STAFF REPRESENTATIVES.
• HEADS OF PARASTARTALS AND GOVERNMENT OFFICIALS HERE PRESENT.
• CAPTAINS OF INDUSTRY AND NRZ CUSTOMERS HERE PRESENT
• LADIES AND GENTLEMEN.
• COMRADES AND FRIENDS.

It is my privilege to have been accorded this opportunity to address you on this special occasion where we are witnessing the delivery by the DIDG/Transnet consortium of equipment to NRZ, this being an interim solution agreed to by the parties, in terms of the Framework Agreement they have concluded.

Your Excellency, the recapitalization of the National Railways of Zimbabwe is long over-due. The organization is operating with infrastructure and equipment that has gone way beyond its economic life. This, your Excellency, has seen the performance of NRZ deteriorating over the years, in terms of productivity, efficiency and general service standards.

The journey to finding a lasting solution to challenges confronting NRZ has been long and demanding, but we are now confident of getting positive results starting with this interim arrangement that seeks to capacitate the NRZ in its operations, for more efficient services to industry and the public, as we focus on rebuilding our economy.

After exploring several options to revive the NRZ in the past decade which were all in vain, my Ministry requested the NRZ Board and Management to come up with a turnaround strategy that would see us transform the institution. A turnaround strategy comprising short and long term measures to successfully transform the rail entity was developed.

Your Excellency, part of this strategic plan was to raise an initial US$400 million to recapitalize the organization. In this regard, an open tender requesting for proposals was floated and closed on 4 July 2017. I am pleased to report that 82 potential investors bought bidding documents and ultimately 6 submitted their bids. The DIDG Transnet Consortium was awarded the tender by the then State Procurement Board on 3 August 2017. Perhaps the question on everyone’s mind is why particularly this deal?

Your Excellency, the consortium’s proposal offered a more comprehensive solution to the recovery of NRZ, which is what is needed to revive the organisation from its current state. Moreover, the proposal offered an off-NRZ –balance sheet funding solution, without recourse to government guarantees, thus addressing one major challenge the NRZ always faced in its efforts to acquire funding.

Your Excellency, last month I had the occasion to tour the NRZ’s infrastructure and facilities, in order to have a full appreciation of the state of our asset, ahead of finalising the deal with the consortium. Apart from confirming the dire need for investment, I was able to get an appreciation of the areas which the $400 million investment will be going into. Your Excellency, I must say that the situation on the ground requires urgent attention as NRZ is a critical enabler to our economy. All the investment that we are attracting into the country will require a vibrant rail system to support the anticipated growth in import and export traffic.

I am convinced that the proposal from the consortium, if well executed, will go a long way in addressing the challenges confronting the NRZ. I make this statement mindful of the long-term requirement of about US$1.7 billion to fully recapitailize NRZ and modernize its systems for it to catch up with the rest of the world.

May I also take this opportunity to pay tribute to the other Government Ministries and Departments, for their support for this project including the warehousing of the NRZ debt. The various Government Departments are again part of a team that has gone into negotiations with our partners and as we gather here today the negotiations have been going on well.

Your Excellency, today you will receive the first consignment of the equipment which is part of the agreed interim arrangement. The rest of the fleet is expected to arrive after this ceremony. I would like to applaud the consortium for their quick response to our call for an interim package to help stabilize our operations, for the benefit of our rail customers.

I have given the NRZ Board and Management tight but realistic timelines within which to conclude their negotiations. They will then submit their draft agreements and project feasibility documents to the Joint Ventures Unit within the Ministry of Finance for scrutiny, in terms of the new Joint-Ventures Act, before submission to Cabinet for final approval.

Your Excellency, it is time to awaken our rail operator! It is time to rebuild our Zimbabwe.

I THANK YOU.