Saturday, 22 April 2017

BROKE NRZ SITS ON $150M REAL ESTATE

THE rundown National Railways of Zimbabwe (NRZ) is sitting on countrywide real estate estimated to be worth more than $150 million, with the potential to raise at least $5 million in rentals monthly.


According to information The Chronicle has pieced together in an in-depth investigation, the countrywide properties include guest houses in the country’s low density suburbs, thousands of hectares of forest land, vast tracts of idle land, church and residential stands as well as plots, farms to rear livestock and grow crops.

The company also owns thousands of hectares of developed commercial stands, undeveloped commercial bays and land with supermarkets and safari farms.
But sources within the parastatal allege the asset register is in shambles, with claims money raked in from the properties cannot be accounted for.  Some of the properties are said to be idle.

The ailing parastatal has engaged Cabinet for Government approval to canvass for investors to raise about $400 million to finance short to medium term recovery.

In the long run, it needs about $10 billion in 10 years to be fully recapitalised and transformed — permanent secretary in the Ministry of Transport and Infrastructural Development, Mr Munesu Munodawafa told participants at a regional railway forum in 2012.

In 2014, then acting, now substantive general manager Engineer Lewis Mukwada told the parliamentary portfolio committee on transport that NRZ was operating at a loss of $4 million every month.

The parastatal has been acquiring land and property for more than 100 years, since its establishment in 1897 as the Rhodesia Railways. Its pension fund has been used to build many more properties.

Sources at the national bulk carrier that cannot be named for professional reasons, said the problems at NRZ are man-made. “A few selfish people are bleeding the company and by extension the country and Southern Africa dry,” said a source.

“The Government has to seriously look into affairs at the company because all hopes of economic revival hinge on a cheap mode of bulk transport to bring down costs of manufacturing so that local products can compete with imports. In a landlocked country, rail is the cheapest way to move raw materials and goods.”

To emphasise the parastatal’s importance to Southern Africa, the NRZ website reads “The NRZ operates a rail network stretching 2 760 route kilometres of 1 067mm gauge track. It sits at the centre of the southern African region and interfaces with contiguous railways on export/import route entries at Mutare/Machipanda for Beira, Sango/Chicualacuala for Maputo, Beitbridge for South Africa, Plumtree for Botswana and Victoria Falls for Zambia. 
The NRZ’s central position in the southern African Region makes it the ‘hub and gateway’ of the region.”

The rail system has collapsed due to decades of neglect.
The Railway Association of Enginemen (RAE), a union that represents the parastatal’s train drivers, has on several occasions warned that the country rail network has become a death trap.

RAE said derailments have become the order of the day due to the unsafe network.
Memorable derailments include a Harare-bound passenger train that left 22 people injured at Heany Junction about 30km east of Bulawayo on August 23, 2014, a Bulawayo-Victoria Falls train that derailed less than eight kilometres after leaving the main station in Bulawayo on October 19, 2014.

On February 24, 2016, a goods train carrying drought relief grain from Zambia derailed near Thompson Junction just before Hwange.

Speaking in 2014, RAE vice president Mr Juniel Manyere said the dilapidated rail infrastructure was stalling the country’s economic revival. He said some sections were so bad, especially on the Bulawayo-Victoria Falls route, that the speed limit is less than 40km/hour.

“This delay in movement of goods and passengers has seen people running away from doing business with us. The Government should urgently intervene and rehabilitate the dilapidated infrastructure,” said Mr Manyere.

The NRZ requires $50 million to lay a new railway line connecting Bulawayo and Victoria Falls. The money, workers believe, can be raised by selling some of the parastatal’s properties or collecting rent from them.

Officials at NRZ said the properties alone, if managed properly could turn around the fortunes of the company and revive the country’s economy.

“Most of these properties have been in the possession of the NRZ before Independence. Before the 1990s when the company was still profitable, some unscrupulous individuals slowly removed some of them (properties) from the system,” said a source.

The sources said the glory days when NRZ was one of the biggest employers with one of the best salary rates in the country could return if the properties are properly utilised. At its peak in the 1990s, NRZ employed about        20 000 people. It now has just about 4 000.
The NRZ is saddled with about $144 million legacy debt with the workers owed $80 million.

NRZ is one of the strategic companies in Zimbabwe’s economy and its demise over the years has been blamed for crippling viability of several downstream industries.
Workers representatives told The Chronicle they knew the company had property that could reverse its spectacular decline, but they could not find a record of the assets.
The Zimbabwe Amalgamated Railway Workers Union (Zarwu) president Mr Kamurai Moyo said workers last year requested the setting up of a taskforce to investigate areas where the NRZ was losing revenue.
“Real estate was one of them. We suspect it could be the biggest loophole. Unfortunately, those who may have information about what the railways actually owns, are not forthcoming,” said Mr Moyo.
Zarwu is suing NRZ for $493 253 that the parastatal was allegedly deducting from members’ salaries but not remitting to the union.
Annually, the parastatal used to move about 18 million tonnes of freight.  This has been reduced to only about 2,8 million tonnes, an 85 percent downscaling of operations.
Last year, Eng Mukwada said the company had cut salaries for workers by 50 to 60 percent.
He said it was a survival strategy caused by viability challenges in the face of declining business volumes.
Workers in Grade A1 to B5 have been paid what they call “the circumcised salaries” only up to November 2015.
The lowest paid (A1) had a salary of about $172 per month before the cuts, while the highest paid (B5) was getting about $485.
Grades C1 to C5 have only been paid up to October 2015.
The lowest paid (C1) used to get about $562 while the highest (C5) got about $1 000.
The salary scale for the D grades which comprise senior managers is a closely guarded secret.
It could not be established if their salaries were also in arrears.
Workers who spoke to The Chronicle on condition of anonymity believe they are not getting paid because of corruption at the parastatal.
In recent years, the NRZ has been selling scrap metal to make ends meet. However, corruption has allegedly infiltrated the operation.
Last year, the Zimbabwe Revenue Authority (Zimra) seized three trucks carrying 18 tonnes of wagon wheels allegedly corruptly acquired from NRZ.  The wheels were being smuggled into South Africa through Beitbridge Border Post.  They were destined for Treppo, a South African company.
The parastatal, stood to lose thousands of dollars had the load been successfully smuggled.
“It is suspected some of the company’s assets are being dismantled and carted out of the country at giveaway prices, disguised as scrap metal,” said an official at the time.
Mr Martin Banda, who was NRZ acting spokesperson at the time, blamed Treppo for the extra load.
Recently, some officials claimed every worker has found a way to loot from NRZ.
“Everyone is looting from the company to survive. We are not getting salaries. People are stealing anything they can lay their hands on to survive,” said a senior official who asked not to be named.
“However, the biggest looters are those benefiting from NRZ real estate. These are the people who have destroyed companies like Zisco, Hwange Colliery Company and everyone that relied on cheap rail transport to manufacture and move goods at cost effective rates.”
An official said the abuse of real estate was rampant.
“On December 31, 2013, rent arrears of nearly $10 million were just expunged from the system. There are no updated records of the rent register. It is suspected most of the sitting clients pay rent direct to individuals. As it stands, the value of rent owed is unknown,” said the official.
“The Government does not know the value of property and land owned by NRZ, excluding locomotives and wagons. NRZ should not be asking for donations. At the moment it is difficult to tell who is reaping millions from this mess because the records are in disarray.”
NRZ spokesperson Mr Nyasha Maravanyika disputed the estimated value of real estate owned by the parastatal.

“Only a property evaluator can give a comprehensive answer,” he said.
Asked if the parastatal has ever had the land valued, he said the issue was still under consideration, pending Government approval.

“The land has to be subdivided before it can be valued. Government has to approve first and there has to be a tender process,” said Mr Maravanyika. Information obtained by The Chronicle and the properties list, seems to suggest subdivision has already been done.

Mr Maravanyika said it was unlikely that the asset register was in shambles because NRZ has a real estate department that collects rent every month and is subjected to regular audits. He said he doubted the company wiped out tenants’ debts in 2013, saying the company needed all the money it could make to overcome challenges.

In November last year, the Government completed a forensic audit at NRZ to investigate revenue collection, real estate and properties and human resources and staffing.
Although the findings have not been made public, the Business Chronicle reported on November 25 last year that a number of managers at the railway firm tendered their resignations in panic, after the audit.

Engineer Mukwada is on record saying heads will roll if the audit reveals wrong doing by management and other staff.  Published with support from the Investigative Journalism Fund

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