NRZ appoints transaction advisors
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.