NRZ ap­points trans­ac­tion ad­vi­sors

Chronicle (Zimbabwe) - - Business Chronicle - Con­rad Mwanawashe

THE Na­tional Rail­ways of Zim­babwe has ap­pointed Deloitte and Touche as trans­ac­tion ad­vi­sors to push its cap­i­tal rais­ing ex­er­cise both lo­cally and off­shore as the rail com­pany seeks to se­cure about $400 mil­lion re­quired for re-cap­i­tal­i­sa­tion.

NRZ gen­eral man­ager Lewis Muk­wada con­firmed the de­vel­op­ments in an in­ter­view and that the $400 mil­lion could be raised in phases.

“They have just started work­ing now. We are go­ing to is­sue re­quests for pro­pos­als so that we get pro­pos­als on rais­ing fi­nance,” said Eng Muk­wada.

He said the funds raised would be used to­wards boost­ing the rail com­pany’s lo­co­mo­tives, wag­ons, track re­ha­bil­i­ta­tion and sig­nalling. NRZ is in dire need of short-term re­cap­i­tal­i­sa­tion to boost its car­ry­ing ca­pac­ity which has plum­meted to around 3,4 mil­lion tonnes in 2015 from a high of 9,4 mil­lion tonnes in 2000.

Use of an­ti­quated lo­gis­tics soft­ware, age­ing fleet of lo­co­mo­tives, wag­ons and tracks are some of the chal­lenges weigh­ing down NRZ lead­ing to the fall in car­ry­ing ca­pac­ity.

If the paras­tatal suc­ceeds in rais­ing funds, it is ex­pected this would push car­ry­ing ca­pac­ity to about 7,6 mil­lion tonnes from the cur­rent 3,4 mil­lion tonnes. NRZ is, how­ever, not alone in the use of ob­so­lete tech­nol­ogy as most man­u­fac­tur­ing com­pa­nies are fac­ing re­tool­ing chal­lenges. This has seen Govern­ment launch­ing a $40 mil­lion pot un­der the Dis­tressed In­dus­tries and Marginalised Ar­eas Fund to in­ject fresh cap­i­tal for re­tool­ing.

Al­ready the Govern­ment is look­ing at grow­ing Di­maf to make it big­ger and more ac­ces­si­ble to more com­pa­nies. In­dus­try and Com­merce Min­is­ter Mike Bimha last month said with re­cap­i­tal­i­sa­tion firms can make a dif­fer­ence.

“We would want to re­visit Di­maf in terms of mak­ing it big­ger and more ac­ces­si­ble. I am sure we can do that if we have com­pa­nies ac­cess­ing more fund­ing and mak­ing a dif­fer­ence,” said Min­is­ter Bimha.

“The big­gest fac­tor to de-in­dus­tri­al­i­sa­tion has been fund­ing in the sense that firms were un­able to source fi­nance from fi­nan­cial in­sti­tu­tions. Even those fi­nan­cial in­sti­tu­tions that had fund­ing, it was short­term money which is not best suited for re­cap­i­tal­i­sa­tion and re­tool­ing. That short-term fund­ing came with puni­tive in­ter­est rates. But here we have com­pa­nies that ben­e­fited from Di­maf and have im­proved.”

NRZ has 168 lo­co­mo­tives, of which only 64 — 38 per­cent — are cur­rently ser­vice­able. Only 3 467 or 48 per­cent of the 7 255 wag­ons are op­er­a­tional. The rail­ways car­rier is ex­pected to play a key role in the coun­try, es­pe­cially in the move­ment of grain fol­low­ing a sub­dued agri­cul­tural sea­son last year.

As such, NRZ is geared to carry out its bulk trans­porta­tion man­date and has part­nered other re­gional rail car­ri­ers to en­hance its ca­pac­ity.

NRZ and Zam­bia Rail­ways have ca­pac­ity to move 1 000 tonnes a day, the na­tional rail car­rier has also an un­der­tak­ing with Cam­in­hos de Ferro de Moçam­bique to move a fur­ther 1 000 tonnes a day through Beira. NRZ and CFM (South) and Transnet Freight Rail will pull re­sources to im­port up to 4 000 tonnes a day through Maputo while the rail com­pany will pool re­sources to im­port up to 2 000 tonnes a day from South Africa.

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