THE NATIONAL Railways of Zimbabwe (NRZ) has been losing revenue to the tune of ZW$22 million (US$142 000) annually in Harare from space barons, who are subletting its properties prompting the rail company to cancel tenant leases.
NRZ has now declared war on the space barons following allegations of corruption and malpractice by tenants, who are making huge profits through subletting while paying peanuts to NRZ. Company acting spokesperson Martin Banda said registered tenants, who were being charged rentals in the local currency, were leasing the same properties in United States dollars.
“The NRZ lost ZW$22 million in 2020 to space barons who leased the organisation’s properties and premises throughout the country. The revenue from the real estate side has been minimal with allegations of corruption and malpractice being the order of the day,” he said.
“We had land barons, who were paying peanuts to NRZ and subletting to other tenants, making huge profit margins. We have since cancelled the leases as the sub-leasing was illegal.”
An audit done internally revealed that NRZ has 110 registered tenants that pay ZW$45 576 (US$294) per month.
“What it means is that the leaseholders earned a total of ZW$210 876 (US$1 360,50) per month giving them a profit of ZW$165 300 (US$1 066,50) after paying NRZ ZW$45 576 (US$294). It is therefore clear that if NRZ was losing ZW$22 million (US$141 935) of revenue annually in Harare alone, the organisation could have lost hundreds of millions across the breadth and length of the country as it owns a lot of properties and premises countrywide,” Banda said.
The NRZ’s revenue cash cow is in its core business of transporting freight cargo and passenger services. However, the organisation has recently focused on creating value in its real estate business, engineering workshops (Inter-Rail-Tech), and diversifying into tourism through its classic rail leisure.
Banda said the process of recovering NRZ property is on track while there were some properties that were sold illegally by local authorities.
“We are in the process of claiming back the properties so that all the revenue generated can be accounted for under NRZ,” he said.
NRZ is in the process of restructuring and streamlining its operations and the rail company is also mulling carrying out an extensive audit of its various spaces throughout the country.
The parastatal is facing a situation where some houses sold a long time back are still drawing water and electricity on NRZ billing accounts.
“This has resulted in unsustainable utility bills, with some areas like Raylton and Ngumija in Hwange having bills in excess of ZW$30 million (US$193 578) since these are charged at commercial rates,” Banda said.