NRZ set to clear $55m salary backlog

Chronicle (Zimbabwe) - - Business Chronicle - Oliver Kazunga

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.

@okazunga.

Dr Jo­ram Gumbo

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