The Infrastructure Development Bank of Zimbabwe says it is re-negotiating its agreement with Hondius Capital Management of the US to set up a US$1 billion infrastructure fund.
The deal, signed about two years ago, commits Government, through IDBZ, to contribute US$200 million or its local currency equivalent towards capitalisation of the fund, with Hondius mobilising the remaining US$800 million from global investors.
Hondius is registered in New York and is involved in financial asset management, hedge fund investment services, capital investment services and investment advisory services.
Critics are, however, doubtful the infrastructure development deal would materialise given Zimbabwe's huge contribution towards setting up the US$1 billion fund.
The funds were meant to finance the development and implementation of high impact infrastructure projects in energy, water and sanitation, agriculture and mining.
Zimbabwe has an estimated infrastructure backlog of US$30 billion, according to the Africa Development Bank, after years of little investment into the sector.
Between 2009 and 2016, the Government spent a total of only US$2 billion on infrastructure projects, the amount analysts say should have been spent on an annual basis.
Chief executive Mr Thomas Zondo Sakala, said given the currency reforms, which saw Zimbabwe adopting a mono currency last year, Government's contribution became so high.
"We are renegotiating the Government's contribution towards the fund (but) it's tough," said Mr Sakala.
"If we agree on a reasonable amount, we will take it from there."
In addition, the deal required Government to immediately release US$100 million, but was not in a position to raise the amount.
Last year, IDBZ and Hondius opened an escrow account and this was part of conditions required to be fulfilled in terms of the agreement to facilitate the establishment of the fund.
The next step, after opening of the account was to set up a local special purpose vehicle to carry out the fund's operations.
At the same time, Hondius would establish an offshore vehicle through which investors would invest in local projects.
The huge debt overhang and arrears to the multi-lateral financial institutions, including the International Monetary Fund and the World Bank has made it difficult for the country to raise long term capital critical for infrastructure projects.
In the absence of significant lines of credit from multi-lateral financial institutions, Zimbabwe has been operating on a tight budget, with the bulk of revenue going towards paying wages, leaving it with little or virtually no money for infrastructure.
Up to stretch infrastructure facilitates internal and external trade, delivery of key utilities such as water and electricity to companies.