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Business Reporter/Harare Bureau
THE Government has pledged to avail $3 million for the rehabilitation of the National Railways of Zimbabwe (NRZ)’s track infrastructure as well as buy workshop equipment.
The giant parastatal is in dire need of capital finance of up to $400 million to facilitate quick recovery and ensure efficient operations.
Last week Treasury noted the appointment of a financial advisor, Deloitte and Touche to facilitate the process of securing adequate funding for NRZ including developing a well packaged and bankable project proposal for engagement with potential partners.
“An allocation of $3 million has been set aside for the rehabilitation of locomotives and wagons, track infrastructure as well as procurement of workshop equipment,” Finance and Economic Development Minister Patrick Chinamasa said.
He said the funding was allocated in the 2017 national budget. Two years ago, a report on NRZ accounts by the Auditor General revealed that the parastatal’s freight unit was generating annual revenue of $91,2 million but incurring expenditure of $103 million. The passenger unit had annual revenue amounting to $3,2 million but the costs gobbled more than $10,9 million which was more than three fold the income.
Yesterday our Harare Bureau reported that NRZ successfully signed a deal estimated to run into several millions of dollars with the country’s sole producer of Ammonium Nitrate fertiliser, Sable Chemicals, for the refurbishment of locomotives and tank cars.
NRZ general manager Lewis Mukwada confirmed the agreement, which is aimed at paving the way for a public private partnership, which the fertiliser producer hopes will help in the turnaround time for tank cars to ensure consistent supply of Ammonia to its Kwekwe plant.
“I confirm that we signed an MoU with Sable, in terms of which we will jointly approach financiers for funding to generate extra capacity to move Sable products. This will cover tank wagons and locomotives,” said Eng Mukwada.
NRZ is operating well below capacity due to operational challenges including obsolete equipment, systems and the general difficult economic environment.
With a rail network stretching 2 760 route kilometres of 1 067mm gauge track, the parastatal was established to provide, operate and maintain an efficient system of public transportation of goods and passengers by rail.
Critically, NRZ carrying capacity has plummeted to around 3,4 million tonnes in 2015 from a high of 9,4 million tonnes in 2000.
Some of the reasons weighing down NRZ and leading to the plunge in carrying capacity include use of antiquated logistics software and ageing fleet of locomotives, wagons and tracks.
This has forced NRZ to scout for financing of which public private partnerships are a funding mechanism being considered.
On its part, Sable sees the deal as step in the right direction in its strategy to ensure efficient movement of ammonia to Kwekwe from its SA-based suppliers.
Sable Chemicals chief executive officer Bothwell Nyajeka said recently that the company had engaged the national rail carrier to improve the availability of locomotives so that the turnaround time of tank cars is reduced.
Sable has adopted a new production model, which is based on full importation of ammonia and for that reason the ammonium nitrate maker wants to secure logistics for moving ammonia to its Kwekwe plant.
Production is at about 120 000 tonnes per year and the target is to double it to 240 000 per annum by the 2018 /19 agricultural season.
It takes roughly 20 days to move tank cars from ammonia suppliers in South Africa to Kwekwe and improvement of the fleet is expected to reduce the turnaround time to as low as 10 days.
The fleet expansion project is expected to be financed by a loan facility from the Afreximbank of about $11 million.
The deal with Sable is one of the many initiatives NRZ is pursuing in its turnaround strategy.
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