Harare – The National Railways of Zimbabwe (NRZ) says it will soon launch new routes in a development aimed at generating more revenue for the loss-making parastatal.
Recently, NRZ general manager Lewis Mukwada without revealing the exact amount said the Company which is registering millions of losses annually is on the brink of financial collapse and has tabled a request before Finance minister Mthuli Ncube for an emergency bailout, or the service risks running into serious problem.
Mukwada added that the losses have been worsened by the recently introduced heavily-subsidised passenger train business, a situation compounded by lack of financial support from government, its main shareholder.
However, the 2014 Auditor General Report noted that the parastatal’s passenger unit had revenues of $3,2 million against expenditures of $10,9 million.
In 2013 the parastatal made losses of $49,1 million, in 2014 it lost $31,6 million and in 2015 it lost $40,88 million. The losses were attributed to low revenue due to capacity constraints, a rigid and inefficient tariff structure, excess staff levels and poor utilisation of assets, which mostly reflected on poor NRZ management and the impact of Government control on business decisions and tariffs.
According to a World Bank report titled “Zimbabwe Infrastructure Assessment: Note for Roads, Railways, and Water Sectors”, the NRZ suffered an eight million-tonne slide in freight traffic between 1990 and 2005. In 1990, NRZ’s freight traffic was about 18 million tonnes but it reduced to about six million tonnes per year during the years 2003, 2004 and 2005 hence precipitating massive losses in revenue.
The Parliamentary Portfolio Committee on Transport in 2016 said NRZ needed $653 million for infrastructure and new equipment and it also owed its workers $70 million in salary arrears.
Addressing delegates at the recent Zimbabwe Infrastructure Summit in the capital the company’s press officer, Nyasha Maravanyika said that new trade routes will help the struggling entity improve on efficiency and revenue generation.
“We have a number of projected new routes, one of which intends to cut the distance from Hwange to Harare by avoiding passing through Bulawayo and going straight to Kwekwe. There is also the projected route from Harare to Mutoko which will stretch over to Nyamapanda and the Lion’s Den to Kafue route. The Kafue route will easily connect the country to Zambia while the Mutoko link will connect with Mozambique with sights set towards improving inter-regional trade in the region.”
Maravanyika added that said government’s recent decision to allow the entity to engage a financial advisor with a top firm Deloitte and Touché Accountants has helped in crafting financial statements that have convinced investors to come on board.
He said that in 2017, after flighting an advert, NRZ managed to attract 82 investors out of which only six were then selected, leaving one entity the Diaspora Infrastructure Development Group -Transnet consortium which reached an agreement with NRZ.
Last week, Government is understood to have agreed to extend the framework agreement for the US$400 million recapitalisation of the National Railways of Zimbabwe (NRZ) by a further six months, to enable finalisation of outstanding issues.
The NRZ recapitalisation deal involves delivery of 34 new locomotives, refurbishment of 28 locomotives, procurement of 200 new wagons and refurbishment of 768 wagons.
In the first four months of last year, NRZ moved 771 000 tonnes of freight compared to 679 000 tonnes in the same period in 2016.
Operational capacity at NRZ had been largely impacted negatively by the unfavourable economic climate that Zimbabwe has been reeling under for close to two decades.
During its glory years in the 1990s, the strategic logistic company used to move 18 million tonnes of freight annually but the figure has plummeted.
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