malvernmugadzikwa
Martin Kadzere
THE National Railways of Zimbabwe (NRZ) plans to outsource the refurbishment of locomotives using a fixed-cost, supply-inclusive model to streamline the repair process and overcome internal delays, as well as high costs associated with traditional methods.
While the NRZ has workshops equipped to handle locomotive maintenance and overhauls, cash flow limitations and extended lead times for procuring spare parts, averaging between eight and 12 months, have hindered its ability to conduct prompt and efficient repairs.
By outsourcing refurbishments, the NRZ hopes to achieve faster turnaround times and potentially reduce overall costs, according to a presentation by the entity’s management at a recent strategic seminar for State-owned enterprises.
The bidding process was expected to close on June 7, 2024. Following this, evaluations were to be completed by June 14, 2024 and submitted to the Procurement Regulatory Authority of Zimbabwe.
“To capacitate itself, the organisation is pursuing outsourcing of locomotive refurbishment as a short-term strategy,” said the NRZ.
“Outsourcing will result in locomotives being refurbished within a short space of time on a supply-and-fix basis compared to the internal processes which are longer and costly.”
The NRZ has been grappling with declining revenue due to a drop in business volumes, from 12 million tonnes annually in the 1990s to the current levels of 2,3 million tonnes, largely attributed to outdated infrastructure and a deteriorating fleet.
Its current fleet consists of 68 mainline locomotives and 73 shunt locomotives. However, only 14 mainline and 25 shunt locomotives are operational. The remaining locomotives need repairs, highlighting the urgency of the NRZ’s refurbishment efforts.
Furthermore, all the locomotives have surpassed their expected lifespan of 25 years, with mainline locomotives ranging from 30 to 48 years old and shunt locomotives now between 40 and 60 years old.
Zimbabwe’s poor railway system is not only hindering the NRZ’s operations, but is also posing a significant challenge to businesses across the country. This was highlighted recently by the Minerals Marketing Corporation of Zimbabwe. It pointed out that limitations of the railway system were hindering efforts to tap into new markets for Zimbabwe’s valuable minerals.
The inefficiencies of the system are also having a ripple effect, placing significant strain on the country’s road network.
With a decline in freight being transported by rail, there is a corresponding rise in heavy goods vehicles using roads. The increased traffic load can lead to premature road degradation, requiring more frequent and expensive repairs.
The compromised state of roads not only increases transportation costs for businesses, but also disrupts travel and commerce, hindering overall economic activity.
Currently, the NRZ is negotiating for a US$115 million facility from the African Export-Import Bank (Afreximbank).
A portion of the funds is earmarked for the procurement of new locomotives and wagons, along with partial rehabilitation of the existing railway infrastructure. To access the funding, the NRZ is collaborating with Afreximbank to develop a non-recourse financing solution channelled through a special purpose vehicle (SPV).
The Mutapa Investment Fund, a sovereign wealth fund, has since authorised the NRZ to form the SPV as requested by Afreximbank to house the assets that will back the US$115 million facility. The NRZ is among the State-owned entities that were placed under Mutapa.
To bolster its fleet, the NRZ is looking to acquire second-hand wagons from Transnet Freight Rail, a South African rail transportation company. The NRZ has since dispatched a technical team to conduct due diligence on these wagons.
While the wagons are old, a cost-benefit analysis conducted by the NRZ revealed that purchasing the TFR B-series wagons would be a more economical option compared to refurbishing its own parked wagons, said the NRZ.
The NRZ is pursuing a public-private partnership model with Silvergill, a company in the rail or logistics industry, for the procurement of 107 of the wagons.
Currently, both parties are engaged in negotiations to finalise the purchase contract.
The NRZ is also pursuing the implementation of an open-access arrangement. The approach opens doors for private players to participate in the operation, management and development of railway infrastructure and services within the country.
The primary objective of open access is to foster a more competitive environment. This, in turn, is expected to drive increased efficiency, spark innovation and ultimately benefit the railways sector as a whole.
The involvement of private entities brings several potential advantages. Increased investments in the sector can lead to the modernisation of ageing infrastructure, the introduction of cutting-edge technologies and heightened focus on enhancing customer experiences.
According to the NRZ, improved customer satisfaction can foster loyalty and ultimately lead to higher client retention.
The company anticipates significant benefits from the open-access model. By attracting additional business through increased capacity and improved service delivery, the NRZ projects a potential rise in its 2024 traffic volume from the budgeted 2.6 million tonnes to around 4 million tonnes.
The NRZ has already begun exploring the potential of open access through a pilot project with Beitbridge Bulawayo Railway (BBR) to demonstrate the effectiveness of this model in enhancing capacity and service delivery within the national railway system.
This year, the NRZ is targeting to transport 2,6 million tonnes of cargo. Looking ahead to 2025, the firm projects a significant increase, aiming to move 4,2 million tonnes.
To align with these targets, the NRZ is also anticipating growth in freight revenue; it is expecting to generate US$56 million this year and US$89 million in 2025.
Online Reporter