Embattled National Railways of Zimbabwe (NRZ) wants the government to immediately take over a debt overhang amounting to US$38m owed to various foreign creditors, Business Times can reveal.
The parastatal is struggling to attract cash for recapitalisation as the load of the debt -the principal amount plus interest- is one of the militating factors.
In fact, NRZ has failed to make progress in potential capitalisation deals because of its choking foreign debts.
The NRZ has also failed to unlock deals under the Customer Financed Rehabilitation Efforts under the government approved Public Private Sector Partnership (PPP) due to debt pile up.
The parastatal strongly believes that if the debt is warehoused, it will unlock opportunities to get the required funds for recapitalisation.
The NRZ has over the years accumulated debts from foreign creditors, which it has, however, failed to service.
In 2003, government, through the then ministry of Transport and Communication, in a letter dated July 9, 2003, committed to take over NRZ debt.
The move by the ministry followed the promulgation of the Railways Amendment Act number 19 of 1997.
But, this has not happened.
Business Times can report that the Department of International Development Central Africa is owed €7 842 054 by NRZ.
The funds, according to official data obtained from the NRZ this week, were utilised in the electrification of the Dabuka to Harare railway line, which began in 1983.
The electrified line has since been decommissioned after thieves hacked the entire section of about 305 kilometres, stealing the overhead wires.
The French based lender, Natexis Banque, is owed €3 015 122. The funds from the facility constituted part funding for the purchase of 30 electric locomotives that traversed the Dabuka to Harare railway line.
About €158 086 is owed to German based investment and development bank, Kreditanstalt Fur Wiederaufbau. The loan was also used to pay for the procurement of the 30 locomotives.
Business Times can report that Natexis Banque and Kreditansalt formed a consortium called 50 Hz Group that jointly funded the procurement of 30 electric locomotives by NRZ.
However, following the decommissioning of the electrified section, all the electric locomotives were stabled.
The NRZ also owes the New Limpopo Bridge Project Investment about US$6m.
In fact, the NRZ received US$7m and US$3m from the New Limpopo Bridge Project Investment for working capital. The NRZ paid US$7m. But the US$3m principal amount and interest charges for the US$3m loan remains outstanding.
The NRZ also owes the regional railway organisations about US$9 077 027. The loans were for haulage and equipment hire charges accrued over the years.
Out of this amount, NRZ owes Transnet of South Africa US$4 172 468 while Mozambique Ports and Railways owes a total of US$4 904 559.
The NRZ also owes Belgian company, Hethimex , about US$9 519 249. The parastatal has a contractual agreement with Hethimex for the supply of locomotive spares.
Contacted for a comment the NRZ acting public relations manager, Martin Banda, confirmed NRZ wants the government to assume the parastatal’s debt to international lenders.
“The NRZ currently has in its books the government of Zimbabwe guaranteed loans received from foreign lenders,” Banda told Business Times this week.
“The organisation is currently operating using life expired equipment and heavily rundown infrastructure. Revenues generated using this equipment are insufficient to cover both operational expenses and loan repayments among others.Consequently, the NRZ has not been servicing these obligations.”
Added Banda: “Pursuant to the foregoing, the NRZ humbly appeals to the government for the immediate takeover of its foreign loans and foreign creditor obligations.
As the NRZ continues to work on its recapitalisation, despite the sanctions’ scourge and trying in vain to get a deal done for the recapitalisation, the focus is that one of the militating factors is the debt owed hence if warehoused will unlock the opportunities to get recapitalised.
Furthermore, NRZ cannot fully unlock Customer Financed Rehabilitation Efforts under the Government approved Public Private Sector Partnership (PPP), with the load of debt it has.”
Banda said the NRZ, however, was looking at options on recapitalisating, revamping, overhauling and rehabilitation of the rail system.
In addition, Banda said the NRZ has also come up with a “bite-size approach” to the recapitalisation vision.
“This approach allows the NRZ to exploit the mining, agricultural and other business concerns using the “pit-to-port” strategy to maximise on business volumes in terms of tonnages and exports,” Banda told Business Times.