‘Bring back vol­umes to NRZ’

Chronicle (Zimbabwe) - - Business Chronicle -

sea­port to across the sea in China or wher­ever, the in­land costs far ex­ceed the in­land costs.

This means for us to be com­pet­i­tive as a coun­try we need to ad­dress the chal­lenge of trans­porta­tion. Zim­babwe mainly uses three modes of trans­port, road, rail and air.

For bulk goods ob­vi­ously it is cost ef­fec­tive to send them by rail. From a macro-eco­nomic point of view it means these three modes must be recog­nised. Each mode must play its roll to sup­port in­dus­try and eco­nomic growth. Cur­rently in Zim­babwe and in the re­gion sur­face trans­port is dom­i­nated by road in­stead of rail and this is not sus­tain­able.

For in­dus­try, while the road may ap­pear con­ve­nient in short term, rail on a sus­tain­able ba­sis is cer­tainly cheaper for long dis­tances. Again bulk com­modi­ties dam­age the road. At the mo­ment we talk­ing of an in­vest­ment of $2 bil­lion Beit­bridge to Chirundu Road. Half of that amount could give us al­most a first class rail­way if we spend a bil­lion on rail­way sec­tor. But if we do not do any­thing on the rail­ways that $2,2 bil­lion, five years down the line we will need to re-in­vest be­cause the road will be dam­aged. This is not to say we should not in­vest on the road but that in­vest­ments must be balanced such that each mode of trans­port plays its role.

From a pol­icy point of view a three-pronged ap­proach has been adopted. First it is to re­cap­i­talise the rail­ways to make it cost ef­fec­tive and at­trac­tive. Each in­dus­try, be it en­ergy, com­mu­ni­ca­tions, road trans­port etc, has got its eco­nomics and there are char­ac­ter­is­tic that at­tract cer­tain in­vestors to that cat­e­gory.

Sec­ondly the rail­way net­work has got a lit­tle of cost sub­sidi­s­a­tion. It is eas­ier to pick a cor­ri­dor on the road to in­vest on the por­tion be­cause it can sup­port it­self.

With rail it is a bit of a chal­lenge be­cause the rail­ways net­work cost sub­sidises it­self. Cer­tain routes we have to in­vest in and main­tain to at­tract growth. The Gov­ern­ment has taken the ini­tia­tive to look at re­cap­i­tal­i­sa­tion of the rail­ways by invit­ing in­vestors to come in. As we talk we have just ap­pointed an ad­vi­sor to help progress faster. I think you have read in the Press a lot of talk about us en­gag­ing cer­tain banks and so on.

The other ini­tia­tive is to ad­dress costs. More and more we are un­der pres­sure to re­duce tar­iffs and the con­ver­sa­tion we are hav­ing is not so much about what is your tar­iff but you need to give us this tar­iff for us to give you busi­ness.

So then the chal­lenge has been how to ad­dress that. What will make this busi­ness sus­tain­able is to com­ple­ment vol­umes and there­fore one other ini­tia­tive taken by the Min­istry (trans­port) is to en­cour­age vol­umes to come back to rail as op­posed to road so that the tar­iffs that the rail is able to give can be com­pet­i­tive.

I think typ­i­cally in the past we used to talk of tar­iffs of 13c per tonne kilo­me­tre in the re­gion on the high end and 8c per tonne kilo­me­tre on NRZ. Cur­rently we are around 5c to 2,5c per tonne kilo­me­tre. In­dus­try and mines are look­ing at 3c or so per tonne kilo­me­tre for them to be able to ex­port. We can only do this through in­crease ef­fi­ciency and vol­umes and these are the is­sues the Gov­ern­ment is try­ing to ad­dress.

This write-up is an ex­tract from a pre­sen­ta­tion made by NRZ gen­eral man­ager Eng Muk­wada at the CZI congress last Fri­day.

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