Why is NRZ inviting investors?
The NRZ has opened investment opportunities to organisations with the capacity in order to generate funding for the recapitalization initiative with a view to restoring operational capacity and capability to profitably support economic activity through public transportation of bulk goods and passengers.
What are the key benefits of investing in the NRZ?
NRZ is a key enabler or cornerstone of economic development in Zimbabwe and the productive sectors of the economy such as manufacturing, mining, agriculture require reliable, safe and cost effective bulk transportation logistics for movement of raw materials and finished goods. The envisaged economic benefits/impact after undertaking the NRZ Recapitalisation project are;
Increased NRZ capacity to handle higher traffic demand
- Reduced operating costs for industry due to lower rail average transportation costs
- Improved rail infrastructure and equipment to the tune of up to US$400 million during the first 5 years which will rejuvenate the existing infrastructure and equipment resulting in reliable, safe and efficient bulk transportation service for industry and economy at large.
- Time savings in terms of transit times to move goods and passengers from origin to destination
- Reduce maintenance cost budget for infrastructure and equipment failure.
- Reduced number and cost of rail accidents and derailments
- Improved productivity and employment of more workers.
Establishment of local industries provide materials (sleepers, ballast, gravel, turnouts, brake blocks, tele-commutation equipment and permanent accessories) for the execution of the project
- Utilization of existing local industry for subcontracting of work or for procurement of materials
- Foreign currency earnings for Zimbabwe through movement of international traffic
- Attract foreign capital into mining and industry since the project creates an environment less costly to invest in and reduces the capital recoupment period considerably
- Creation of jobs in downstream industries to supply required materials to execute the project
- Reduced road operating costs, road accident costs and road maintenance costs, owing to diversion of traffic away from heavy trucks on national highways to rail
The Benefits are summarized as follows:
|Key Benefits||Before Investment||After investment|
|Improved Customer Service||Unreliable and unsafe service to customers due to life expired locomotives, wagons, infrastructure and outdated IT systems||Modern rolling stock equipment, infrastructure and IT systems to be procured as detailed below, allowing for improved operational efficiencies, safe and reliable customer service|
|Improved export competitiveness of local goods||Due to poor rail service exporters resort to expensive road haulage||Efficient, safe and cost effective railway service to improve competitiveness of local exports.|
|Development of Local Support Industry and employment creation||At present there are poor linkages as local industry lacks capacity to supply spares to support railway equipment and systems||41% of planned US$400 million Capex to be allocated to local industry. Subsequent local maintenance support to be developed. Employment to be generated through railway support industry.|
|Reduced damage to road infrastructure and road carnage||Due to poor rail service bulk goods currently transported by road, leading to premature failure of road infrastructure increased road accidents||Transportation of bulk goods to shift to an efficient railway service to, thus saving the road infrastructure as well as reducing road accidents.|
|Servicing of NRZ Debt||NRZ’s debt stands at US$389 million as at 31 December 2017 including salaries backlog||Government to initially warehouse the Debt for the first five years and the NRZ service the debt thereafter.|
|Improve Staff morale||Part salaries being disbursed leading to poor staff morale||Improved operations leading improved cash flows, and current Salaries to be paid in full.|
NRZ key areas for investment
The NRZ requires a capital injection of circa US$400 million in the short to medium term to return to profitability. NRZ will embark on a phased recapitalisation project to restore operational capacity and return to profitability in the short term. The recapitalisation project will involve the rehabilitation and renewal of plant, equipment, rolling stock, track, signalling and telecommunications infrastructure and the supporting Information Technology (IT) systems highlighted as follows;
|Section||Current State||After Project|
|Signalling||Mainline CTC no longer functioning and manual accident prone system in use||Radio based and Computer interlocked Track Warrant Systems|
|Track Infrastructure||NRZ’s 2 760km network has many cautions (speed restrictions) which have accumulated over a number of years and they comprise about 10% of the total network; branch lines life expired steel sleepers and low capacity 40kg/m rail; double handling as customers new and old customers further from rail-heads||New rail and sleepers to be utilised to clear all cautions, upgrade key branch-lines to concrete sleepers and 45 kg/m rail and extend rail-heads to directly serve emerging and old customers at source.|
|Electrical Installations||All electrical equipment primarily the yard lighting, generators, substations and H.T. reticulation, air conditioners, workshop equipment in need of attention.||Yard lighting in all major yards to be upgraded. Substations, air-conditioning, HT reticulation to be repaired. New Workshop equipment to be procured.|
|Traction and Rolling Stock||Fleet of 168 locomotives of which 60 locomotives are operating with poor reliability.||Fleet reliability to be improved through procurement of 24 mainlines locomotives, refurbishment 15 mainline and 13 shunt locomotives|
|Out of 7,153 wagons 3,641 are stabled for various defects leaving 3,512 in service but with poor reliability||Fleet reliability to be improved through procurement of 200 wagons, refurbishment of 700 wagons|
|Out of a fleet of 283 passenger coaches of different classes, 175 passenger coaches are out of service only 108 are in use though with poor reliability.||Fleet to reliability to be improved through refurbishment 142 coaches|
|Of the 47 cabooses, 15 cabooses are in service but with poor reliability.||Fleet to reliability to be improved through refurbishment of 20 cabooses|
|Workshops||Workshop buildings have been adversely affected by many years of lack of routine maintenance, for instance glazing and roofing.||Workshop buildings to be repaired|
|Plant and Equipment||Infrastructure maintenance and operational activities continue to be hampered by intermittent breakdown of motor vehicles and heavy plant e.g. bulldozers and heavy duty tamping machines.||Fleet to reliability to be improved through procurement of various Plant and Equipment and tools|
|Information Technology||NRZ’s information technology systems still running on the old COBOL batch processing systems and mainframe hardware.||Modernisation of hardware and software and full roll out of SAP|