NRZ set to clear $55m salary backlog
THE National Railways of Zimbabwe (NRZ) is set to clear a 16 months’ salary backlog amounting to $55 million once the firm’s business grows in line with its recapitalisation programme.
Transport and Infrastructural Development Minister Dr Joram Gumbo said this while responding to questions in Parliament on Wednesday. The ailing parastatal is saddled with about $144 million legacy debt with the workers owed $80 million in outstanding salaries.
In April this year, NRZ employees staged a strike that lasted for almost two months demanding full payment of their dues.
Dr Gumbo said the underperformance of the national economy has led to NRZ’s subdued performance as the parastatal’s revenue generated from the low volumes of traffic moved was insufficient to meet the organisation’s expenditure obligations, which are largely fixed in nature.
In 2014, the Auditor General’s report for NRZ accounts showed that the parastatal’s freight unit was generating annual revenue of $91,2 million, but incurring expenditure of $103 million.
He said the Government was of the view that the solution to NRZ’s challenges lies in the long-term recapitalisation of the firm.
“As the business grows and equipment is rehabilitated or replaced, NRZ will roll out the following programme to address the salary arrears:
“Progressively increase predictable partial salary disbursement and achieve payment of full monthly salaries.
“Clear transport allowance arrears ($970 000); clear salary backlog (16 months) million).”
As part of its revival plan, NRZ has appointed a transaction advisor to provide technical and professional advice on the recapitalisation programme, ($55 which involves securing a strategic partner to inject fresh capital into the railways firm.
“The engagement of potential investors is expected to be in place in the first half of 2017,” Dr Gumbo said.
The firm requires about $400 million in the short to medium term for recapitalisation.
Turning to the financial status of NRZ pension fund, the Minister said the fund was presently in a sound position as confirmed by the last actuarial valuation that was undertaken as at December 31, 2015.
Dr Gumbo said the funding level was determined as 94 percent which is well above the 75 percent given as general guidance by the pensions’ regulator to the pensions industry as a target to attain.
“Total value of assets of the fund as at September 30, 2016 was $398 million. The total number of pension fund beneficiaries as at the same date was 12 100.
“The pension fund has been able to consistently pay the pensions as they fall due and is up to date with payments.
“It is projected that benefits of $25 million will be paid out this year alone,” he said.
Dr Gumbo said these benefits were mainly being paid from investment income as NRZ was failing to remit contributions to the fund consistently.
“As at September 30, 2016, NRZ owed the pension fund $30 million. The NRZ has engaged the pension fund to convert part of this amount into a long term loan which it will service after its recapitalisation,” he said.
Dr Joram Gumbo