Ministry engages SA firm over NRZ deal

Source: Ministry engages SA firm over NRZ deal | The Herald July 4, 2016

Tinashe Makichi recently in Victoria Falls
The Ministry of Transport is in negotiations with South Africa’s Transnet Limited over a partnership deal with the National Railways of Zimbabwe. The deal, if successful will secure funding required for the rehabilitation of Zimbabwe’s rail network. Government is also in talks with the Development Bank of South Africa with the aim of securing further funding to revamp its operations which have been subject to challenges due to lack of enough working capital .

Speaking at the Zimbabwe National Chamber of Commerce Annual Congress in Victoria Falls last week,Transport and Infrastructure Development Deputy Minister Engineer Michael Madanha said NRZ requires $2 billion for the acquisition of new rolling stock as business opportunities for the parastatal have been low while overall the institution requires $6 billion to match world standards.

“We are in talks with quite a number of partners like DBSA South Africa,Transnet , Chinese investors. However nothing has been firmly concluded,” said Deputy Minister Madanha.

The group’s loss for 2015 widened to $40,88 million from $31,6 million in the previous year contributing to a cumulative loss of $276,43 million since dollarisation. This comes as capacity utilisation has fallen to low levels while employees have gone for long periods without getting paid.

The state-owned enterprise which is supposed to be the prime mover of freight, closed the year with net current liabilities of $170,91 million from $131,13 million in 2014. Latest statistics from Zimstat shows that the bulk of NRZ’s revenue comes largely from coal freight but the Auditor General Mildred Chiri in her report notes that revenue could be higher if the railway company properly accounted for all income streams including properties.

She notes that not all tenants have been allocated individual accounts in SAP and this encourages fraud while follow ups and recovery of amounts owed by tenants occupying NRZ properties could be difficult.

The audit also states that management failed to provide lease agreements for some of the properties which are supposed to provide rental income. If NRZ secures the fund it will be able to increase revenue from operations, return to profitability and in turn will be able to repay salaries and salary backlog, and creditors.

Vice President Emmerson Mnangagwa while giving his official address at the Congress said NRZ requires about $6 billion for it to modernise to global levels. “About $6 billion is needed for rail capacity upgrade and modernisation. I have no doubt that the urgency to rehabilitate and construct new infrastructure is well received, as such enablers constitute the lifeblood of industry and commerce,” said Vice President Mnangagwa.

Deputy Minister Madanha added that public private partnerships have proved to be worthwhile as evidenced by the commissioning of the Mutare –Plumtree Higway .