Prosper Ndlovu, Business Editor
TREASURY has pledged to assist the National Railways of Zimbabwe (NRZ) regain its footing as a strategic logistics player in the economy through financial guarantees among other support instruments.
The company is desperate for capitalisation amid rising overhead costs and failure to efficiently service the market as the bulk of its equipment has outlived its lifespan. The Advocate Martin Dinha-led board and management have been pleading for Government support citing dampened capacity despite rising demand for cost effective bulk transportation. The company has said it needs 41 new locomotives, 300 wagons and at least 300 coaches to effectively cope with the demand for its services.
However, lack of investment in maintenance and upgrading of the railway infrastructure has seen freight carriage falling from a peak of 18 million tonnes in 2007 to an average of three million tonnes per annum, piling pressure on the country’s road network. Reduced capacity has negatively impacted on jobs and businesses down the value chain.
Finance and Economic Development Minister, Professor Mthuli Ncube, who met the NRZ board and management in Bulawayo on Friday, said all support measures were being explored as the Government expects the NRZ to play its transformative role on the journey towards an upper middle-income economy by 2030.
In line with the newly unveiled National Development Strategy (NDS1:2021-2025), transforming the railway transport sector was paramount. He revealed that in the 2021 National Budget, the Treasury has already set aside ZWL$250 million targeting rehabilitation and maintenance of critical infrastructure.
Prof Ncube said the Government recognises efforts by the NRZ board and management to secure strategic partnerships with foreign counterparts, and pledged to render facilitative support to ensure success of such joint ventures. Following the collapse of the US$400 million NRZ/DIDG/Transnet capitalisation deal last year, the company is pursuing talks with partners in countries such as Indonesia, Turkey, China and Russia.
“First of all, it’s about the Government creating the right environment for NRZ to consummate its relationships with external investors. Whether it’s in the form of a joint venture or something that is a variation of that, it always needs Government support,” said Prof Ncube.
“It may also even need it to be granted national project status and that’s always granted by the Ministry of Finance. So, there is something very specific there.
“I’m aware that some of the financial arrangements require a Government guarantee. I am talking about simple actionable points that will change the direction of the projects.”
Prof Ncube said the Treasury continues to mainstream rail infrastructure maintenance in its budget and that the Government would seek more accountability for such funds. As a mono-rail service in the country, Minister Ncube said, NRZ must rise to the occasion.
“I came to understand how they have used the money just to make sure that we can provide a good logistics service to the nation,” he said.
NRZ services the mining sector by moving bulk ore but weak capacity has seen this business being taken by haulage trucks which are damaging roads.
“What we need for railways basically are the tools for trade, wagons, locomotives and coaches. We also need a complete overhaul of the railway system. The 2 700km of our permanent railway needs upgrade,” said Adv Dinha.
The revival of NRZ is critical in view of the plans to resuscitate Zisco as well as its linkage to the massive investments in the coal to hydrocarbons sector in Hwange.
“I’ve understood all that and what you require as support from the Government to make things happen.
“So, we as the Government stand ready to support NRZ in your vision, mission and desires, we stand ready to work with you,” said Prof Ncube.