NRZ wants to sell 60% stake

FINANCIALLY-troubled National Railways of Zimbabwe (NRZ) has approached the government seeking the greenlight to raise nearly $700 million by either disposing 60% of its stake or through borrowing money on the open market to fund its recapitalisation and turnaround programmes.

The parastatal, which owes workers close to $90 million in outstanding salaries and wages, is looking to raise $635 million to settle its debts and replace its antiquated equipment, most of which has outlived its life span.

NRZ board chairperson, Larry Mavhima, confirmed yesterday that his board had prepared a proposal to be submitted to Cabinet soon.

"We have two options. One is for us to borrow money from the market with government assuming it as sovereign debt, because, in our current shape, we can't borrow. This will allow us to run the operations. The second option is to get a technical partner who assumes our debt and gets equity in NRZ and becomes a shareholder, but this needs Cabinet approval on the best way to proceed," Mavhima said.

Sources said if a partner was to assume the NRZ debt and inject capital into the company, government could lose up to 60% of its stake.

"But, that could present a serious challenge for national pride and yet it's the best way to go at the moment," the source said.

Mavhima refused to disclose the proposed stake which could go up for sale, saying he had to wait for instructions from the government after the issue has been discussed in Cabinet.

He said since he joined NRZ a year ago, the government had only injected $2,1 million into the entity and the money was raised through Treasury Bills.

"We only got $2,1 million in Treasury Bills from which was part of the debt owed to NRZ by the Grain Marketing Board, and that money was then used to pay workers at the time we had job actions," Mavhima said.

He said the process was expected to be complete by the end of the second quarter and benefits would be realised before the end of the year.