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DIDG approach court to challenge ‘irregular’ NRZ contract termination

By Mashudu Netsianda

The Diaspora Infrastructure Development Group (DIDG) has approached the High Court challenging the National Railways of Zimbabwe (NRZ)’s decision to terminate the consortium’s US$400 million contract to recapitalise the country’s sole railway company.

DIDG/Transnet consortium won the tender to recapitalise and rehabilitate the strategic railways firm in 2017.
DIDG/Transnet consortium won the tender to recapitalise and rehabilitate the strategic railways firm in 2017.

DIDG/Transnet consortium won the tender to recapitalise and rehabilitate the strategic railways firm in 2017.

However, in July, Cabinet revoked the recapitalisation deal that NRZ and DIDG/Transnet Consortium on the basis that the group lacked financial capacity to implement the project after DIDG and Transnet that formed the consortium parted ways.

DIDG, through its lawyers, Atherstone and Cook Legal Practitioners, this week filed fresh summons at the Bulawayo High Court citing NRZ as a defendant.

In papers before the court, DIDG wants an order declaring the cancellation of the contract unlawful with NRZ paying the legal costs.

“On April 28, 2017, the defendant through the State Procurement Board now called the Procurement Authority of Zimbabwe (PRAZ) issued a tender under reference number 5699-5642 calling for prospective investors to provide funding either in the form of debt and/or equity for the recapitalisation of its rail network and related infrastructure,” said the lawyers.

“The salient feature of the tender was that bidders had to provide evidence of financial capacity to fund the recapitalisation of the project to the tune of US$400 million. On 16 October 2017, the plaintiff was awarded the tender on terms and conditions stipulated in the tender documents.”

Harare Mayor Councillor Bernard Manyenyeni (with red necktie), Commercial Ambassador of the Republic of Korea to Zimbabwe Taek IL Tiger Kwon (right), Diaspora Infrastructure Development Group Executive Chairman Donovan Chimhandamba (centre) and Dongah Construction Industrial for water supply project director Bae, Dong Cheol (second from left) pose for a photo with members of the Korean business delegation in Harare yesterday (Picture by Memory Mangombe)
January 2018: Then Harare Mayor Councillor Bernard Manyenyeni (with red necktie), Commercial Ambassador of the Republic of Korea to Zimbabwe Taek IL Tiger Kwon (right), Diaspora Infrastructure Development Group Executive Chairman Donovan Chimhandamba (centre) and Dongah Construction Industrial for water supply project director Bae, Dong Cheol (second from left) pose for a photo with members of the Korean business delegation in Harare (Picture by Memory Mangombe)

DIDG argued that NRZ unlawfully terminated the contract on July 30 despite making representations.

“The plaintiff plead that the cancellation of the tender was unlawful in that it was irregular because the decision was not made by NRZ, but external forces including the Minister of Transport,” said the lawyers.

DIDG said the reasons for termination of the contract were grossly unreasonable, arguing that they didn’t violate the terms and conditions of the tender.

“As a result of the defendant’s unlawful and unjustified cancellation of the tender, the plaintiff suffered damages to the tune of US$235 984 757, which plaintiffs will claim through a separate legal action. Wherefore the plaintiff claims an order declaring the cancellation of award tender number 6599-5642 for the recapitalisation of NRZ unlawful,” said the lawyers.

NRZ is yet to respond to the application.

In September, DIDG, through the same lawyers, filed a lawsuit claiming damages to the tune of US$235 984 757 split in two parts namely project costs and “reasonable profits”, which DIDG anticipated to secure had the deal materialised. The matter is still pending.

Diaspora Infrastructure Development Group (DIDG) executive chairperson Donovan Chimhandamba
Diaspora Infrastructure Development Group (DIDG) executive chairperson Donovan Chimhandamba

Last year, Government removed the exclusivity clause for the US$400 million NRZ recapitalisation deal after DIDG failed to provide proof of funding within 12 months of the framework agreement.

Under the framework arrangement, DIDG was required, among others, to provide Government with proof of funding of the project.

Transport and Infrastructural Development Minister, Joe Biggie Matiza, said the exclusivity clause was removed in order to allow competition from potential investors to the project.

The exclusivity clause empowered the consortium with exclusive rights to negotiate the US$400 million NRZ recapitalisation deal.

The removal of the exclusivity clause meant that the proposed recapitalisation and rehabilitation of NRZ was now open to competition from other potential investors.

DIDG had sourced 13 locomotives, 200 wagons and eight passenger coaches for the insolvent parastatal as part of the recapitalisation project. The Chronicle

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