TINASHE MAKICHI
Government will deploy “significant funding” to the ailing National Railways of Zimbabwe (NRZ) as part of efforts to extricate the troubled parastatal from a crisis, a Cabinet minister has said.
The NRZ is seen as a vital cog in Zimbabwe’s economy and has potential to become an important regional transport hub as its network provides a vital link between landlocked countries like Zambia, Democratic Republic of Congo as well as seaports in South Africa and Mozambique.
Government hopes that the restoration of NRZ’s operational capacity will renew confidence in industry and make the parastatal a preferred and cheaper mover of bulk freight in and outside the country.
Transport and Infrastructure Development Minister, Felix Mhona, said the fresh bailout would go towards refurbishment of wagons and procurement of additional ones.
Although he did not reveal the size of the bailout, the NRZ requires more than US$2bn to turn around its fortunes, but at least US$400m would help reposition the parastatal for self-sustenance.
Mhona said at least 100 wagons would be refurbished and 45 coaches will be procured. In addition, rail tracks will be rehabilitated to remove speed restrictions, derailments and reduce turnaround times. More vehicles and trucks would also be procured to enhance and monitor the railway line, he said.
“As you are aware the government is the shareholder and NRZ is our baby therefore funding for revival will be partly coming from Treasury,” Mhona said.
The development comes after the NRZ recently launched its revival and development strategy in Bulawayo.
NRZ chairman Martin Dinha said to NRZ he was looking forward to the fresh bailout.
“We are very happy and excited as the NRZ that the government has taken a clear position and responsibility to recapitalise NRZ, a strategic national asset, moreso at a time as we move towards attaining Vision 2030. Our prayers were answered,” Dinha said.
In 2017, the government awarded the tender to revive NRZ to South African firm Transnet, which partnered a consortium of non-resident Zimbabweans under the name the Diaspora and Infrastructure Development Group (DIDG) in the project.
The consortium promised to inject US$400m to recapitalise the NRZ.
But, the government last year terminated the consortium’s contract saying it lacked the financial wherewithal to implement the project. But, DIDG refuted the allegations saying it provided term sheets from over 11 financial institutions totalling to over US$1bn.
Consequently, DIDG has slapped President Emmerson Mnangagwa’s administration with a US$236m lawsuit and has demanded the reversal of the cancellation of the cancellation of the deal.
The lawsuit, according to analysts,
dented NRZ’s prospects of securing international funders. The NRZ, which is also battling political risk associated with being a State enterprise in Zimbabwe, has been scrambling to attract fresh cash for recapitalisation.
The NRZ is also mired in a debt overhang amounting to US$600m, which any suitor is expected to take over.
Apart from that, any investor is expected to inject at least US$2bn to refurbish the railway line company’s fleet and meet other obligations.
The snub by international funders has forced the government to move in and bail out the ailing NRZ.
The struggling NRZ’s goods transport business, which at its peak was raking in about 95% of the company’s revenue, has declined to about 2.5m tonnes of cargo last year from a peak of 18m tonnes shipped in 1998.
At its peak, the NRZ employed over 17 000 workers in the late 1980s. To date the staff compliment has dwindled to 4 600.
