NRZ targets 16% increase in revenues

THE National Railways of Zimbabwe says it is targeting to register over $90 million in revenues this year, after receiving new equipment from a $400 million deal facilitated by South Africa’s Transnet and the Diaspora Infrastructure Development Group (DIDG).

The NRZ received 108 wagons, seven locomotives, and seven passenger coaches last week and is expecting an additional 92 wagons, six locomotives and 28 coaches to be delivered in the coming few weeks.

Lewis Mukwada, the parastatal’s general manager, said with the new equipment, NRZ will be in a position to fulfil its obligations.

“We have been failing to uplift all the ferrochrome that miners want to export,” he said.

“When all equipment is received, we will be able to uplift an additional 100 000 tonnes of cargo per month. The bulk of it is ferrochrome, which will no doubt contribute towards the country’s foreign currency earnings.

“For us at NRZ, this will boost our monthly revenues by $1,1 million, after allowing for the lease charges for the equipment,” Mukwada added.

NRZ registered $80 million revenues in 2015 down from $91 million in 2014, according to Grant Thornton-audited results.

In the full year to December 31, 2015, NRZ’s current liabilities exceeded current assets by

$170 912 721. The parastatal also incurred a net loss of $40 887 993, contributing to an accumulated loss of $276 432 288 in five years.

This was a result of the economic instability, which was characterised by low liquidity and in turn posed a threat to NRZ’s going concern because it could not meet its shor-term liabilities.

Mukwada, however, believes that the country’s State-owned firm is now out of the woods and will be registering profits soon.

“May I also point out that the $400 million programme is part of the longer term recapitalisation programme of $1,76 billion that will restore the country’s railway network to full capacity,” he said.

NRZ has about 255 kilometres of track that needs to be rehabilitated across the country over the next three years.

NRZ’s capacity had been severely undermined by the obsolete equipment and broken down infrastructure, which resulted in service and cargo handled by the railway company declining from 18 million tonnes per annum in 1998 to current levels of two million tonnes per year.

The rail carrier had 168 locomotives, but only 64 are serviceable, while 3 467 out of 7 255 wagons are usable.

At its peak, NRZ employed over 20 000, a pale shadow of its current situation.

DIDG chairman, Donovan Chimhandamba said the equipment leased to NRZ was designed to provide immediate rolling stock capacity to the parastatal while a deal is being finalised.

“It is also important to note that new locomotives can take anything between 18 and 24 months from ordering to delivery. So the interim solution we are putting in place is a pragmatic approach in boosting NRZ’s immediate capacity as opposed to idling the current capacity for 18 months,” he said.

“This interim solution rolling stock we brought will continue to be here until such time the new permanent stock is manufactured and delivered. This pragmatic approach will allow the NRZ to immediately service the increasing demand to move coal and chrome from the likes of Hwange and Zimasco, while new rolling stock is being manufactured,” he added.

Chimhandamba further indicated that the partnership between South Africa’s Transnet, DIDG and NRZ would assist the parastatal become one of the best railway operators in the region.

Transnet in the last financial year moved 220 million tonnes, while NRZ moved 2,7 million tonnes. Financially, in the same year, Transnet had revenue of US$5 billion, Ebidta of US$2 billion, with a net profit of US$215 million under a tough operating environment.

In that same period, it recapitalised its network by about US$1,6 billion and retained cash and cash equivalents of US$1,2 billion.

“I hope this gives you some comfort in terms of the consortium capacity.

“While the $400 million rehabilitation programme is aimed at raising NRZ capacity from three million tonnes to 10 million tonnes per year by fixing the per way, signaling and providing rolling stock, our intention is to ensure the local manufacturing industries that support NRZ recapitalisation program me in Zimbabwe are re-capacitated,” Chimhandamba said.

Financial Gazette

Gary Murambiwa
the authorGary Murambiwa