via NRZ running at $4m loss monthly – DailyNews Live 8 July 2014 by Mugove Tafirenyika
HARARE – National Railways of Zimbabwe (NRZ) urgently needs $10 billion for recapitalisation as well as offsetting a $144 million debt owed to service providers and employees.
This came out when officials from the parastatal tendered oral evidence on their operations to the parliamentary portfolio committee on Transport yesterday.
Lewis Mukwada, the NRZ acting general manager, told the Amos Midzi-chaired committee that dilapidated infrastructure, undercapitalisation and competition from road transport had devastated the national rail company.
Parliament heard that NRZ is facing a serious lack of resources to maintain and replace vandalised infrastructure, which has been in use for well over 50 years.
The impact of the inefficiency of the entity has been described by economists as the missing link in the economic growth matrix.
Mukwada said the NRZ was operating at a loss of about $4 million per month yet the company’s wage bill consumes 69 percent of total revenue.
He said the NRZ owed its over 6 000-strong workforce $36 million in salary arrears, which they are settling in 50 percent tranches.
Mukwada said cash was needed to refurbish wagons and related infrastructure.
“The $10 billion is what we need all in all but in the short term, we could do with about $400 million for about three years to start normal operations,” Mukwada said.
“Almost all locomotives have gone beyond their nominal design life with the newest being 21 years old and the oldest at 40. They were all purchased in the 1960s, except for one that we acquired in 1992.”
The committee also heard that NRZ owed NSSA, Zimdef , Zimra and medical aid societies millions of dollars. The parastatal was also failing to pay statutory obligations.
Mukwada, however, said other parastatals such as Grain Marketing Board and Ziscosteel among others also owed them millions of dollars.
“GMB owes us $10 million, Zisco $7,7 million and the Zimbabwe Power Company, our major customer, owes us $2,8 million. We however, owe Zimra $435 million in VAT and paye,” Mukwada told legislators.
He said government had stopped availing funding to NRZ, exacerbating the situation.
He called on Parliament to ensure that the 1997 Railway Amendment Act which sought to transfer the responsibility to maintain the rail infrastructure to government was revived.
With such a state of affairs, the legislators felt that any efforts to resuscitate the firm would be akin to flogging a dead horse as the amounts required were huge for a country struggling to pay its workforce.
The NRZ boss said the Gweru-Harare electric line which supplied power to the electric locomotives had ceased to be operational since 2006.
Mukwada said NRZ’s capacity had been reduced to dangerous levels since 2000, but picked up around 2009. But due to lack of funding from Treasury, there has been no further growth.
The committee also heard that the economic challenges plaguing companies such as Ziscosteel, Hwange Colliery, among others that do business with NRZ, had impacted on its efficiency.
Mukwada claimed the situation at the parastatal had been worsened by the existence of economic sanctions imposed on the country by western nations.
COMMENTS
Like many other organisations in Zimbabwe what is needed above everything else is competent and transparent management.This government would like us to believe that money will solve all our problems which is just not true. In fact this government has shown themselves to be very poor custodians of our country’s finances. We go on about indigenisation as if it’s something new when in fact the railways were indigenised in the 80’s and look where that
has landed us. Let’s get over having a racial connotation to everything & employ the best people for the job.
Goebbels, Hitler’s propaganda minister believed that a lie often repeated is soon perceived as truth. This Mukwada is repeating the lie about sanctions hoping to pre-empty his looming failure. Since he is acting he must make the correct sound bytes to appease the driver of the gravy train! This has nothing to do with non-existent sanctions. This lie will not stick!
The railways are effectively dead. In these hands nothing will work. Like everything else.
H Ho Ho another excuse to put out the hand and scrounge and not pay the money back
Not Running Zvakanaka…..is now Not Running Zvachose.
How can they justify running a corporation making $4m loss a month and continue doing the same thing and hoping something different happen?
These guys did not invest a cent in the railways which they found in working order in 1980 and then they start blaming everybody else.
I will not be surprised to see that despite these huge losses the executives will be getting hefty salaries more than executives in other countries who are running successful rail companies. That may explain the huge tax bill.
This also shows the folly of appointing the previous CEO who only got the job because of his Zanu PF links but had no business acumen whatsoever.
Privatise
Privatising wont do it got to hand over 51 percent straight away to zanupf . To think this was the main stay of exports for years and years handling cargo from Congo to Zambia to SA to Botswana. Now it’s collapsed -well like zanupf which will collapse sooner than later. Khama once said of a nation if a country doesn’t have a history it’s doesn’t have a soul or a future -Zanupf under Mugabe have obliterated Zimbabwes history prior to 1980 and its shows it doesn’t have a future and it doesn’t have a soul.
The NRZ is dead and needs to have a burial. These figures are not making sense. Mismanaged and the people who mismanaged should be brought to answer. I am trying to make sense of the figures and looks like somebody was stealing the usual case in Zimbabwe. How do you have a workforce of 6000 and nothing is happening plus you owe then wages. 1 + 1 = 2 we gone back to that stage. My God things have really taken a escalating back run in this country. You would never think we were in 2014 but in 1600. From Independance only 1 locomotive was bought
@So so never correction. After independence 76 Diesel Electric locomotives were acquired from the USA and Canada. The demise of the Railways was caused by getting rid of the experienced staff and appointing relatives and party cadres who were ill equipped to run this enterprise. All the done was to steal,party and back pay each other. Anybody that tried to expose the rot was removed, so everybody started to steal what they could. Catering managers were taking home tons of food and selling to relatives and friends. I know. That is why some of us refused to take up posts with the task force.