Zimbabwe Cabinet Stalling $400 Million Rail Recap, Minister Says

HARARE (Capital Markets in Africa) – Zimbabwe’s cabinet hasn’t approved a $400 million deal with Transnet SOC Limited to recapitalize National Railways of Zimbabwe because it’s concerned about the government taking on more debt, Transport Minister Joram Gumbo said.

Zimbabwe awarded the contract to the South African ports and rail operator in August in a joint venture with the Diaspora Infrastructure Development Group after issuing a tender to recapitalize state-owned NRZ. The Zimbabwean operator, which is plagued by aging rolling stock and infrastructure, has about 2,759 kilometers (1,714 miles) of rail line, according to the African Development Bank. The country is about the size of California.

“We haven’t cancelled the deal, it’s only that cabinet made some reservations and comments on aspects of the deal,” Gumbo said Monday by phone from the capital, Harare. The cabinet will need to look into the debt the agreement would accrue to Zimbabwe, which is dealing with an acute liquidity crisis that’s led to fears of shortages and unpaid wages, he said.

Source: Bloomberg Business News