GOVERNMENT will lift subsidies on services offered by public enterprises, which should force parastatals to raise service charges to viable levels to survive the economic downturn the countr
y is going through.
Presenting the 2004 budget, Finance minister Herbert Murerwa yesterday said public enterprises were being directed to charge economic and viable prices to ensure they were financially independent from the fiscus.
The move means that all prices being offered by the parastatals will be reviewed upwards to match those charged by private players offering the similar services.
The statement contrasts sharply with Murerwa’s position last year when he said parastatals could become viable through increased government funding.
Yesterday Murerwa said parastatals should survive on their ability to compete.
“The continued survival of Air Zimbabwe is critical for its operation, the promotion of tourism and national pride,” Murerwa said. “It is therefore imperative that it charges economic prices for all its routes.”
He said government would facilitate the search for a strategic partner for the national airline to enable it to re-capitalise and enhance service and market share in the region and beyond.
Murerwa said the National Oil Company of Zimbabwe (Noczim) would also charge the same price for fuel as private players so that it could stay in business.
“In view of the deregulation of the fuel industry, Noczim will continue to supply fuel to the public sector as well as the agricultural sector and is expected to charge break-even prices for all its products.”
Murerwa called on the Grain Marketing Board (GMB) to diversify its operations so that it could achieve break even levels.
“The adjustments to maize and wheat producer prices have not been consistently passed on and reflected in selling prices. This has led to very costly commercial borrowing for the GMB,” he said.
Murerwa said the performance of the National Railways of Zimbabwe had been severely undermined by inadequate capitalisation and poor revenue recoveries, resulting in the provision of basic passenger and freight services being severely strained.
“Availability of passenger coaches, wagons and locomotives is no longer guaranteed,” he said.
“Commercial rates, which are now applicable to inter-city rail passenger services and general freight, have improved revenue flow. Similarly, fares on urban commuter routes will be reviewed to levels which allow recovery of operating costs,” he said.
All parastatals have been facing serious cash flow problems because of either undercharging their services or massive corruption.
Zesa had been failing to pay debts and has been threatened with termination of contracts by regional power utilities.
Noczim has failed to procure fuel for the country due to under-pricing of the commodity and alleged massive corruption.
Airzim was rocked by salary wrangles with engineers going on strike resulting in the parastatal incurring heavy losses after it hired South African engineers and at times sent its aircraft to Ethiopia and other countries for repairs.
The government has over the past year made a policy shift, opting to recapitalise loss-making parastatals instead of privatising them.