NRZ struggles to attract investment

via NRZ struggles to attract investment | The Herald 4 December 2014 by Tinashe Makichi

National Railways of Zimbabwe is struggling to attract investment from the private sector a situation which has seen it failing to stem its ballooning salary debt, a senior company official said.

NRZ’s salary arrears have increased to about $55,8 million as the parastatal’s fortunes continue to take a knock due to a subdued market.

In June this year, NRZ owed its 6 000 workers about $36 million in outstanding salaries and backpay with workers going for six months without salaries while it is reported that half a billion dollars was needed to recapitalise the parastatal.

In an interview with The Herald Business yesterday, NRZ acting general manager Mr Lewis Mukwada said if NRZ was able to recover (with the necessary support of the international investors), it would be a vital national asset.

He said further investment, particularly from the private sector, will remain an issue as NRZ is “not quite bankable”.

“Whenever we try to get loans the banks want collateral and they look at your assets and balance sheet, so in terms of our assets generally we don’t have the ones that are good enough to be used as collateral.

“The infrastructure that we have is not movable and on the locomotives some can be used but they belong to the State. This is the reason why as NRZ we normally rely on Government guarantee instead of using our own assets,” said Mr Mukwada.

“NRZ also owe employees and Zimbabwe Revenue Authority some money, therefore the balance sheet is not strong at the moment. So for somebody to give us a loan when we already owe other people such huge amounts of money becomes a challenge,” he said.

Mr Mukwada said currently they are working on the Development Bank of South Africa facility and the financial institution at least understands the current state of Government entities.

NRZ has received $460 million from the DBSA, which has been used primarily to support infrastructure and rolling stock.

NRZ is responsible for a national network of approximately 2 700-3 000km, with its main line running for 1 500km.

Over the past 10 years, the parastatal has received very little funding and has only managed to undertake very few upgrade projects. NRZ has a fleet of 168 locomotives, 70 of which are serviceable, although all are reaching the end of their lifespans.

The bulk of the fleet is over 30 years old and there has been a plan to do “stop-gap” rehabilitation of locomotives at approximately $750 000 per unit until finance is available to buy a new fleet.

NRZ has around 8 000 wagons, but only 50 percent of these are in working order. About 385,5km of rail track needs to be rehabilitated across the network.

Mr Mukwada said the signalling and telecommunications network was in urgent need of repair and rehabilitation.

Currently, NRZ is using a UHF system “just to get by”.

In the longer term, NRZ has identified a number of new lines it would like to construct the majority of which needed detailed feasibility studies.

NRZ plans to undertake on a commuter rail service between Harare and Chitungwiza, a 1,067mm gauge, 26km double track line at an estimated cost of $440 million.

Lion’s Den to Kafue a line to provide shorter transport links between Mozambican and South African seaports is among the projects.

Harare/Bindura to Moatize (Mozambique) is also another project to be churned out to facilitate the transportation of granite from Mutoko and agricultural produce between Zimbabwe and Malawi via Mozambique.

Mr Mukwada said NRZ’s system was designed to transport 80 million tonnes per annum but it is currently moving only six million tonnes due to depressed market, and its reduced capacity.