HomeBusiness DigestNational Railways of Zimbabwe to restructure

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NRZ’s major challenges are obsolete equipment, the need for rail line maintenance and high staff overheads, he said.

Karakadzai told businessdigest in an interview that the Minister of Transport Communication and Infrastructural Development, Nicholas Goche, would soon present a draft memorandum for recommendation to cabinet, which would see the parastatal lose its monopoly over the railway lines. 

He said restructuring would be anchored on vertical separation, where ownership and maintenance of infrastructure will be removed from running the system. New players would be brought in, Karakadzai said, adding NRZ would operate toll gates.

“The current NRZ will remain running freight and passenger services only,” he said.

Karakadzai said that the NRZ and other railway operators would have to pay access fees to use the system.

 

He said there was need for a railway regulator once space had been opened up.

Karakadzai said several options  such as privatisation and concessions had been thrown around.

He said privatisation was thrown out because railway infrastructure and its operations were capital-intensive amid feelings the return on investment was long term in nature.

The concessions option was also shot down, Karakadzai said.

He added that countries  that followed this route produced catastrophic failures.

Railway concessions are contracts that are entered into between governments for an investor to operate in a particular area of the railway system.
“Britain, Mozambique, Kenya, Tanzania and Malawi all had to withdraw their concessions. Zambia tried to chase away a concessioner but the World Bank put in a condition that they had to pay off the investor,” he said.

He also said Build Own Operate Transfer agreements had been considered.

Karakadzai, however, noted that there was already the Beitbridge Bulawayo Railways Company, which was still a virgin project. The company has a concession period of 30 years from 1996 to 2026. It operates the line from Beitbridge to West Nicholson.

Karakadzai said the operations had already been commercialised after the passing of the 1997 Railways Amendment Act, which granted authority for competitive tariffs.

At the moment, NRZ requires US$2 billion to restore operations.  The parastatal was allocated US$20 million this year against a bid of US$75 million. Karakadzai said NRZ should access the first tranche of the US$20 million in the first quarter of this year.

Since dollarisation, NRZ was allocated US$7 million in 2009, US$12 million in 2010, US$15 million in 2011 although the company managed to access only half of the amount.

NRZ monthly revenues are at US$7 million against expenditures of US$10,5 million. Karakadzai said NRZ was capable of operating with only 5 000 of its 9 000 employees but a decision had been made not to retrench. At the moment, salaries are interchangeably staggered among the employees, he said.

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