THE National Railways of Zimbabwe (NRZ) is set to improve its monthly revenues by $1.1 million on the back of newly acquired equipment from South Africa under an interim arrangement with the parastatal’s investors, general manager Engineer Lewis Mukwada said.
The first batch of the equipment, which comprises 150 wagons, seven locomotives and seven passenger coaches, was officially received by President Emmerson Mnangagwa in Bulawayo yesterday at a colourful ceremony that was attended by hundreds of people and graced by top local and foreign dignitaries. The Diaspora Infrastructure Development Group (DIDG)/Transnet Consortium has partnered with NRZ under a $400 million recapitalisation deal. Under the framework agreement, NRZ is leasing 13 locomotives, 200 wagons and 34 passenger coaches from Transnet as an interim solution to its resource gaps.
Eng Mukwada told the gathering that as a result of the leased equipment, NRZ will be able to transport an additional 100 000 tonnes of cargo per month, which will boost volumes and foreign currency earnings.
“For us as NRZ this (interim equipment) will boost our monthly revenues by $1.1 million, after allowing for the lease charges for the equipment,” he said.
“One of the provisions in the framework agreement is the availing of critical equipment needed by the NRZ on a lease arrangement as an interim solution to our challenges. This is in recognition of the fact that financial closure of the deal will take some time to finalise while NRZ continues to lose business due to shortage of locomotives and wagons.
“As NRZ we have been failing to transport all the ferrochrome chrome that miners want to export.”
Eng Mukwada said the NRZ locomotives would not only benefit chrome miners, but the generality of the parastatal’s customers as the equipment will be deployed on all the mainline corridors. “For our local customers, we are planning to release 400 wagons from our workshops this year to help address their requirements,” he said.
Eng Mukwada said NRZ will also carry on with its short-term initiatives that have seen the deployment of voice communication network on most of the main line corridors and thus reducing speed restrictions on the track from 422km to 246km at present, pending finalisation of the deal.
He said the $400 million recapitalisation deal was part of NRZ’s longer-term $1.76 billion recapitalisation initiative, which is expected to restore Zimbabwe’s railway network to full capacity.
“The balance of this programme will naturally be carried out under the envisaged joint venture arrangement,” he said.
Speaking at the same occasion, Transport and Infrastructural Development Minister Dr Joram Gumbo said the journey to finding a lasting solution to NRZ’s challenges has been long and arduous. “But we are now confident of getting positive results starting with this “quick-win” interim arrangement that seeks to capacitate the NRZ in its operations, for more efficient services to industry and the public, as we focus on rebuilding our economy,” he said.
Dr Gumbo said for the past decade, efforts to turnaround NRZ were to no avail until Government requested the parastatal’s board and management to come up with a turnaround plan comprising short and long-term strategies. The DIDG/Transnet consortium was awarded the tender by the then State Procurement Board in August 2017.
“The consortium’s proposal offered a more comprehensive solution to the recovery of NRZ, which is what is needed to revive the organisation from its current state,” he said.
This, Dr Gumbo said, offered an off-NRZ balance sheet funding solution without recourse to Government guarantees, thus addressing one major challenge NRZ always faced in its efforts to acquire funding.
“I have given the NRZ board and management tight but realistic timelines within which to conclude their negotiations. They will then submit their draft agreements and project feasibility documents to the joint ventures unit within the Ministry of Finance and Economic Planning, for scrutiny in terms of the new Joint Ventures Act, before submission to Cabinet for final approval,” said Dr Gumbo.
NRZ board chairman, Mr Larry Mavima, said under the new political dispensation and new economic order, the railways firm was at the forefront of providing tangible evidence that Zimbabwe was open for business.
“Most of this equipment has already arrived and more will be coming before the end of the month…this also completes our first deliverables for the 100 Day plan that ends in February 2018,” he said.
Mr Mavima encouraged the private sector and the business community in Zimbabwe to take advantagre of the winds of change blowing at NRZ to reduce their transport costs.
Industry executives have said that improved efficiency by NRZ is expected to see companies that transport bulk cargo reducing logistic costs by between 15 percent and 20 percent.