NRZ Makes Strides in Overcoming Legacy Challenges
National Railways of Zimbabwe (NRZ), Board Chairman, Advocate Martin Dinha revealed the organization’s progress in addressing long-standing challenges and pursuing transformational strategies in the recently released annual report of the company.
The report shed light on NRZ’s financial position, as well as its efforts towards debt clearance, infrastructure improvement, and increased operational capacity.
Advocate Martin Dinha first acknowledged NRZ’s positive financial position, attributing it to the fair value gain on property and equipment after conducting an asset revaluation exercise. However, he also pointed out that the generated cash inflows were insufficient to fully meet the organization’s obligations, particularly regarding the accumulation of creditors’ balances.
Legacy Foreign Loans
Dinha emphasized that NRZ’s balance sheet was still impacted by conversion losses stemming from legacy foreign loans incurred in the 1990s. Despite this challenge, the report highlighted the board’s concerted efforts to restructure and streamline the company’s convoluted organizational structure. This included addressing domestic legacy debts and clearing salary arrears, leading to restored industrial harmony within the organization.
Deputy Minister Madiro provided further insight into NRZ’s progress, stating that a significant amount of $326 million, equivalent to US$3.8 million, was allocated to clearing salary arrears. She expressed satisfaction that salaries were now up to date since September 2021, leading to improved employee morale.
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Looking ahead, the report outlined NRZ’s strategic objectives. The board aims to increase the rail infrastructure quality index from the current 57 percent to 68 percent by 2025, while also working towards increasing freight volumes to 6.7 million tonnes per annum (from the current 2.3 million tonnes) and enhancing passenger services. To achieve these goals, the company intends to secure financing for locomotive procurement and infrastructure rehabilitation through off-balance sheet cashflow backed financing.
NRZ faces outstanding obligations of approximately US$23 million related to the electrification project, which involved the purchase of electric locomotives for the Dabuka-Harare line. While part of the loans was repaid, payment difficulties arose in 2005 due to vandalism of the railway lines.
The report also highlighted ongoing discussions between NRZ and interested banks regarding financing options for the procurement of locomotives and infrastructure rehabilitation. NRZ seeks to leverage the foreign currency income generated from its exports/imports business to service the funding facility, thereby enhancing its operational capacity.
Renewed Support
Amidst these challenges and developments, the report expressed optimism regarding NRZ’s outlook. The organization’s shareholder has demonstrated renewed interest and support for NRZ’s endeavors, aiming to benchmark major strides and contribute towards the realization of an upper middle-income economy by 2030.
In terms of financial performance, NRZ reported that its inflation-adjusted expenditure for the past year amounted to $10.532 billion, compared to $12.201 billion in the previous year. Notably, the organization achieved a comprehensive profit of $289.284 billion, thanks to monetary gains and fair value gains.
Lastly, the annual report serves as a testament to NRZ’s commitment to address legacy issues, improve operational efficiency, and contribute to the nation’s economic development. With ongoing initiatives and the backing of key stakeholders, NRZ aims to position itself as a key player in the transportation sector, supporting Zimbabwe’s aspirations for growth and prosperity.
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