via NRZ audit reveals gross irregularities – Sunday News Jan 31, 2016
Dumisani Sibanda Sunday News Correspondent
AN internal audit into operations of the National Railways of Zimbabwe has revealed gross irregularities with the cash strapped parastatal reported to have failed to collect about $10 million in rentals, Sunday News can reveal.
The audit report revealed that there were procurement problems which resulted in NRZ paying for an oversupply of grid resistors with stock enough to last 100 years. The audit report dated 27 October 2015 — produced by the works council, which is a combination of both management and workers representatives — also revealed that there was rampant theft of goods in transit on NRZ trains with suspicion that there were “organised syndicates perpetrating fuel thefts” being transported on the parastatal’s trains.
The report noted that NRZ with its huge inventory of properties throughout the country was “not realising revenue they ought to, due to the way they are being administered”. “Leases take long to be signed and tenants occupy properties before signing the lease agreements,” reads the report. “Collections are done by the Finance Branch while the management of properties lies with the Real Estates Section. Reconciliations are not timeously done. At the time of writing the report, US$9 739 377, 88 was said to be outstanding and around 400 files were being finalised to be handed over to the Legal Sections.”
The committee observed that there was a vacuum in terms of the rent collections.
“The Real Estates Department is doing the leases while the Accounts Department is receipting those tenants that come on their own (to pay),” states the report. “There are no clear responsibilities in terms of rent collection, following up and knocking on the tenants’ doors.”
So serious was the laxity in rent collection that NRZ was relying on the honesty of the tenants to come forward and pay while others have gone for five years without paying rent.
The report noted: “In areas like Dete, Ngumija, Chimanimani and Rutenga, those tenants who are disciplined just come and receipt payments with the Goods Office.”
It was observed that “there was no aggressive drive to collect rentals”. The target of last September rentals was $377 000 but only
$225 970 was collected. According to the audit: “Some tenants have not been paying rent for more than five years. For instance, MacSherp (Kadoma) now owes more than US$188 000 in rentals.”
The committee noted that statements showing rent arrears were not being generated. Concern was also raised that NRZ “still provides water and other reticulation services to Hwange Raylton residents despite the fact that the organisation disposed of these houses and that they are now largely owned by non-railway employees who are defaulting on payments.”
The investigations by the committee also revealed that the parastatal appeared “over the years, to be saddled with a culture of delay in making or implementing its business decisions . . . a culture that has cost NRZ millions of dollars”.
It gave the example of obsolete Electrical Locomotives (ELs).
“It is unlikely that the operation of the electric train services can be resuscitated in the foreseeable future as the supporting infrastructure and equipment is almost all gone and would require a huge capital outlay to resuscitate it,” reads the report. “The Electrical Locomotives, a few of which were last used more than five years ago, have become obsolete while NRZ watches apparently with no decision having been made as to what to do with the 30 Electric Locomotives out of which four only are said to be serviceable. The Electric Locomotives continue to lose value.”
The committee also learnt that copper components worth more than $1 million allegedly stolen from the Electrical Locomotives were recovered from the bush at Dabuka, Gweru.
“Two issues arise from this,” says the report. “Firstly, the Electrical Locomotives are being vandalised by thieves. Secondly despite the obsolescence and vandalism, the Electrical Locomotives still hold some scrap metal value particularly in their non-ferrous metals, which should ameliorate NRZ cash-flow challenges if sold.”
It was also discovered that NRZ continues to pay electricity bills for sidings that were closed and have remained out of use for years. These sidings are serviced with electricity from transformers belonging to the Zimbabwe Electricity and Distribution Company.
According to the report, the alleged lackadaisical approach to business has resulted in inefficient billing and revenue collection, among a host of problems. The committee gave an example of the hire of steam locomotives by Hwange Colliery Company Limited which it had not paid for because there were no invoices from NRZ.
“The steam locomotive hired out to HCCL in October 2014 was only initially invoiced an amount of US$90 149,90 (invoice number 1420),” according to the report. “From then on, no invoice was issued until 13 October 2015, only after enquiries by the Task Force (Committee). The invoice is worth US$253 283,11 (invoice number 1506). It is also crucial to note that the total amount of US$343 433,01 remains as uncollected revenue and there is no record on any follow up with HCCL that was done.
“The hire rate for the locomotive is US$1 000 per day.”
However, the report notes that there is a need for the “urgent recapitalisation predominantly for the renewal or upgrading of plant, equipment and infrastructure in order to increase its capacity and efficiency”.
It notes that “lack of funding has resulted in inadequate rolling stock and locomotive power and an infrastructure incapable of sustaining the required business levels”.
The report reads that there is a “perpetual shortage of locomotives”. The Government has been looking for $750 million to recapitalise the struggling NRZ whose workers are only now being paid their December 2014 salaries. Efforts to get a comment from NRZ were fruitless.
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