TransNamib hopes to plug bleeding balance-sheet
National rail service provider TransNamib remains in a challenging financial position due to its short-term cashflow position and limited rolling stock capacity.
Combined with a prolonged delay in spare parts, these factors are steadily exacerbating the rail operator’s woes.
“Our ability to generate more revenue is heavily impacted by factors beyond our control. For example, in 2022, we ordered spares; we are still awaiting delivery,” said CEO Johny Smith.
Responding to questions from New Era, Smith explained the delay in the delivery of spare parts has negatively impacted TransNamib’s overall maintenance, and it has made a historical backlog even greater.
For a company solely dependent on rail movement, these issues directly correlate to decreased operational capacity.
He added: “Once we are able to execute our maintenance strategy, TransNamib will create more capacity in terms of the rolling stock and increase our revenues. Thus, the immediate aim is to try and repair faulty and parked locomotives by obtaining the required spares to move additional freight”.
Smith stated for TransNamib, freight remains the future.
According to him, the company’s ability to move break bulk freight and the cost of moving goods through economies of scale remains unmatched. The CEO maintained the potential for the organisation remains great.
“As a company, we have focused our energies towards equipping ourselves to realise that potential in terms of capturing a greater share of the market.”
For its 2018/19 financial report, TransNamib presented its shareholder with the first and unqualified audit report in a period of more than 10 years. During that financial year, TransNamib generated revenue of N$517 million, which was an increase of 10.5% in revenue year-on-year.
Despite the challenge of rolling stock, Smith said TransNamib managed to attain its highest percentage increase in revenue in over a decade. The progress was, of course, derailed by the Covid-19 pandemic and its wide-ranging impact from revenue generation to the disruption of global supply lines.
In efforts to bring TransNamib back on track to profitability, the company said it needed N$2.6 billion for a five-year business plan that was launched in 2018.
This would hopefully allow it to reach break-even by the end of 2023.
After four years of running around to source funding, the national rail operator in March 2022 announced it finally secured a long-term loan of N$2.6 billion to implement its five-year business plan.
This plan, Smith explained, would enable TransNamib to get back on track to profitability and plug its bleeding balance sheet while stabilising revenue.
The State-owned rail operator managed to secure a long-term loan from the Development Bank of Southern Africa in partnership with the Development Bank of Namibia.
The loan is to be used for the remanufacturing of rolling stock, acquisition of new rolling stock, modernisation of the TransNamib workshop, as well as the upgrading of signalling equipment, including spare parts and associated equipment.