Thursday, June 01, 2017

Zimbabwe: Vibrant NRZ Will Oil Economic Recovery
Zimbabwe Herald

The expression of interest by 53 companies to finance the National Railways of Zimbabwe's recapitalisation is a welcome development. It is an indication that not all is lost for the parastatal, as there is still hope for its turnaround.

NRZ requires $2 billion in the long-term to return to full operation and about $400 million in the short-term to scale up operation. The $400 million is needed to acquire new machinery and to rehabilitate existing infrastructure to increase quality services.

NRZ has 168 locomotives, of which 64 (38 percent) are serviceable, and 7 255 wagons, 3 467 of which (48 percent) are operational, while the rest are set for different reasons.

This has resulted in its carrying capacity falling from 9,5 million tonnes in early 2000 to 3,4 million tonnes in 2015, which does not bode well for current efforts to turn around the economy.

The holding of the pre-bidding conference is a critical step towards reviving NRZ, but more importantly it shows Government's commitment to resuscitating NRZ, especially when it is coming just days after it scrapped duty on importation of locomotive spares.

The scrapping of duty on engine spares, equipment and components, which was done in terms of Section 235 of the Customs and Exercise Act, will be in force for the duration of this year.

It is, therefore, critical that Government expedites the process of identifying and bringing an investor on board to ensure that NRZ returns to full operation in the shortest possible period. This is not to say that Government should not properly screen the investors.

It is critical that NRZ gets a credible investor of good standing, otherwise all the efforts being made to revive the parastatal will come to naught

The resuscitation of NRZ will be critical as it will add more impetus to the country's economic turnaround that has been given a major boost by a rebound in agricultural production anchored by Government's Command Agriculture programme.

The revival of NRZ will ensure that the movement of inputs to different parts of the country and the movement of agriculture produce to different collection points is done efficiently and cost effectively by rail, because of its ability to move large volumes of goods at once.

This is important, especially for the tobacco sector where there has been concerted efforts to persuade farmers to use coal for curing their tobacco as an alternative to wood. The sticking point has been getting the coal to the farmer cheaply, and a revived and ticking NRZ will be handy for the crucial job.

Being a bulky mineral, the transportation of coal requires rail transport to be cost effective, instead of road transport which is in use at the moment, which tends to be more expensive.

There has also been a lot of development in the mining sector where mines have been scaling up operations by investing in new machinery, which require rail transport as opposed to road transport.

A case in point is the Zimbabwe Consolidated Diamond Company that bought heavy duty equipment, which is being delivered to the Chiadzwa diamond fields via Forbes Border Post in Mutare by road.

Reviving NRZ is also critical in ensuring that it grows its revenue, which in turn will be able to pay salaries and clear backlog, and retire debt that is weighing down the parastatal. We welcome the efforts being made to revive NRZ, which, in all fairness, we view as long overdue.

Of course, we are alert to the fact that illegal sanctions imposed on Zimbabwe by Western countries contributed to the problems affecting NRZ, as it had become difficult to obtain spare parts from countries like Britain, which originated the railways system during the days of Rhodesia. The coming in of other investors should be able to bust the sanctions and ensure that NRZ is overhauled and ready to serve the nation at its full capacity.

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