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Govt negotiates $216m for NRZ

by Staff reporter
23 Dec 2018 at 08:32hrs | Views
Government is in negotiations with the Diaspora Infrastructure Development Group and Transnet Consortium for the financing of the National Railways of Zimbabwe (NRZ) to the tune of $216 million, according to Government's 2019 Infrastructure Investment Plan.

The move to recapitalise NRZ is in line with the Government's short-term Transitional Stabilisation Programme (TSP) - expected to run from 2018 to 2020 - which is targeting to improve Zimbabwe's business operating environment.

Treasury has also confirmed that it will seek $60 million "from the market" as financial closure for the Diaspora Infrastructure Development Group-Transnet Consortium transaction could take longer than anticipated.

Treasury says the $2 billion required for the complete rehabilitation of the NRZ is "beyond the capacity of the Budget", hence the move to seek out private sector forms of financing.

In the investment policy document, Finance and Economic Development Minister Mthuli Ncube said the fundraising effort will include "leveraging on the parastatal's assets and cash-flow".

"Already negotiations are underway with the Diaspora Infrastructure Development Group/Transnet Consortium to inject $216 million into NRZ, under a joint venture arrangement, targeted at rehabilitation and upgrading of rolling stock, track, signalling and information and communication systems, among others," said Prof Ncube.

"Reaching financial closure under the above arrangement will take time and hence Government will assist NRZ to mobilise funding from the domestic market to allow the parastatal address some of the current challenges."

Operational capacity at NRZ had  been impacted negatively by the unfavourable economic conditions in the past few decades.

Tracks have been sinking due to overuse without routine repairs, while signalling systems and power transmission lines between Harare and Dabuka have been vandalised.

Annually, in the 1990s the parastatal used to move about 18-million tonnes of freight, which has now dropped to only about 2,8-million tonnes, an 85 percent downscaling of operations blamed on poor infrastructure and mismanagement. At its peak in the 1990s, the NRZ employed about 20 000 people and now has just about 4 000 employees.

Added Minister Ncube: "During 2019, an amount of $60 million will be mobilised from the market to address some of the immediate infrastructure requirements of NRZ."

In the TSP policy document, Government will implement further measures to ease the doing business environment, with the objective of improving the country's competitiveness in terms of the business and investment environment. The NRZ is the country's sole railway company and despite its infrastructure having fallen into disrepair over the past few decades, it remains central in providing transport for bulk raw materials, finished goods within the country and SADC.

As part of an interim solution to capacitate NRZ, the parastatal early last year received the first batch of the equipment comprising 150 wagons, seven locomotives and seven passenger coaches from DIDG/Transnet.

This came out of a $400 million recapitalisation deal that the NRZ sealed with DIDG in 2017. And as result of the positive efforts, official figures show that the NRZ's cargo export capacity has increased by 85 000 tonnes to 492 000 in the first 11 months of 2018 compared to the same period last year.

This reflected a 20 percent jump from the 2017 figure. The development was boosted by strong activity at regional ports of entry mainly Zambia, South Africa and the Democratic Republic of Congo (DRC).

Source - zimpapers