Chronicle Editor
Natasha Chamba/Kudzai Chikiwa, Business Reporters
THE National Railways of Zimbabwe (NRZ) has projected a 17 percent jump in freight volumes of both domestic and export cargo to four million tonnes this year compared to 3, 4 million tonnes transported last year.
The giant firm is pinning its hope of increased capacity on the fruition of the $400 million Diaspora Infrastructure Development Group (DIDG) – Transet recapitalisation deal, whose finalisation is expected within the next six months.
NRZ general manager Engineer Lewis Mukwada has said the parastatal is positioned for significant growth this year despite the harsh economic environment.
He hopes the anticipated conclusion of the $400 million deal will give the business a new lease of life and attract more business.
“For the first quarter we are still taking stock of our figures…but by monitoring January and February it’s above what we moved last year, which means we are expecting to move four million tonnes this year,” Eng Mukwada told Business Chronicle.
In 2016 NRZ moved an estimated 2, 7 million tonnes of freight and increased this to 3, 1 million tonnes in 2017.
Last year the railway firm was only able to move 3, 4 million tonnes spurred by enhanced capacity after it received additional equipment under the interim solution agreement with DIDG/Transet.
The framework agreement of the $400 million deal was signed in February last year and had a one year lifespan, which has expired but has since been extended by six months.
Delays in concluding the deal have been attributed to intricate legal processes between NRZ and Transet of South Africa.
Eng Mukwada said the transport giant needs to intensify infrastructural development to lure more clients and increase its volumes.
Rail transportation is deemed more competitive because of its relatively cheaper costs and bulk capacity.
“It is a known fact that NRZ infrastructure is in a sorry state and action is needed. Our main priority is on infrastructural development as this is what we depend on to make a surplus and increase our profits,” he said.
While the $400m deal is expected assist the firm regain lost ground, Eng Mukwada said the transport giant requires an estimated $1, 7 billion to fully recapitalise.
“We believe with an initial US$400 million as a stepping stone, we can get to a position where we can record a surplus. In future we need to raise money through further borrowings to see the business volumes grow,” he said.
Eng Mukwada said refurbishment of rail infrastructure, signalling and communications systems were critical for efficient service.
“We have looked at our system and identified critical areas where we need to invest and that’s how we came up with this budget that intensifies infrastructural development. We are planning to use $120 million in infrastructure development and $180 million to rehabilitate locomotives and wagons. The rest ($100 million) is set aside for signalling and communications ICTs development,” he said.
Eng Mukwada expressed optimism that the $400 million deal would succeed with all due diligence having already been done.
“We had underestimated the time frame needed to bring the results of the deal so we had to go back to Government through our parent ministry to ask for an extension. We have been given another six months to pursue the discussions further,” he said.
Eng Mukwada said the NRZ is going to engage Transnet for an update on the deal next week.
In the 1990s, NRZ was moving 18 million tonnes of freight annually but the figure nose-dived to around 3, 2 million tonnes last year.
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