Source: NRZ, Sable ink refurbishment deal | The Herald December 13, 2016
Conrad Mwanawashe: Business Reporter
THE National Railways of Zimbabwe has signed a deal estimated to run into several millions of dollars with the country’s sole producer of ammonium nitrate fertiliser, Sable Chemicals, for the refurbishment of locomotives and tank cars. According to an officials the MoU is expected to increase pulling and ammonia carrying capacity for the national rail carrier.The agreement is aimed at paving the way for a public private partnership, which the ammonium nitrate fertiliser producer hopes will help in the turnaround time for tank cars to ensure consistent supply of ammonia to its Kwekwe plant.
NRZ general manager Lewis Mukwada confirmed the signing of the MoU yesterday.
“I confirm that we signed an MoU with Sable, in terms of which we will jointly approach financiers for funding to generate extra capacity to move Sable products. This will cover tank wagons and locomotives,” said Eng Mukwada.
NRZ, wholly owned by Government, is operating well below capacity due to operational challenges including obsolete equipment, systems and the general difficult economic environment.
With a rail network stretching 2 760 route kilometres of 1 067mm gauge track, the parastatal was established to provide, operate and maintain an efficient system of public transportation of goods and passengers by rail.
Critically, NRZ carrying capacity has plummeted to around 3,4 million tonnes in 2015 from a high of 9,4 million tonnes in 2000.
Some of the reasons weighing down NRZ and leading to the plunge in carrying capacity include use of antiquated logistics software and ageing fleet of locomotives, wagons and tracks.
This has forced NRZ to scout for financing of which public private partnerships are a funding mechanism being considered.
On its part, Sable sees the deal as step in the right direction in its strategy to ensure efficient movement of ammonia to Kwekwe from its SA-based suppliers.
In an interview with The Herald Business recently, Sable Chemicals chief executive officer Bothwell Nyajeka said the company had engaged the national rail carrier to improve the availability of locomotives so that the turnaround time of tank cars is reduced.
Sable has adopted a new production model, which is based on full importation of ammonia and for that reason the ammonium nitrate maker wants to secure logistics for moving ammonia to its Kwekwe plant.
Production, currently at about 10 000 tonnes per month, is targeted to double up to 240 000 per annum by the 2018 /19 agricultural season, provided a few hurdles, of which the availability of rail tank cars used to ferry ammonia is one, are solved.
Currently, it takes roughly 20 days to move tank cars from ammonia suppliers in South Africa to Kwekwe and improvement of the fleet is expected to reduce the turnaround time to as low as 10 days.
The fleet expansion project is expected to be financed by a loan facility from the Afreximbank of about $11 million.
The deal with Sable is one of other initiatives NRZ is pursuing in its turnaround strategy. Recently national rail carrier appointed Deloitte and Touche as transaction advisors to push its capital raising exercise both locally and offshore.
The parastatal is seeking to secure about $400 million for re-capitalisation with the funds expected to be used towards boosting the rail company’s locomotives, wagons, track rehabilitation and signalling.
If the fund raising initiatives succeed carrying capacity is expected to rise to about 7,6 million tonnes from the current 3,4 million tonnes.