NRZ assets revalued at US$3 billion

By on May 22, 2022 0

the herald

Oliver Kazunga, recently in Bulawayo
The assets of NATIONAL Railways of Zimbabwe (NRZ) have been revalued at over $3 billion, meaning the parastatal is not insolvent as previously claimed, a senior official has said.

Previously, the assets of the national railway company were estimated at only $400 million, but a revaluation of assets carried out by an independent consultant indicated that the assets of the NRZ are in fact worth more than $3 billion.

NRZ Chief Executive Ms Respina Zinyanduko said that with such a strong balance sheet, it has opened up opportunities for the organization to borrow for the recapitalization of operations.

She said the board and management are of the view that the assets of the organization are not properly valued.

“So we engaged Bard Real Estate, an independent company, to carry out an asset valuation exercise which resulted in an appropriate value and a comprehensive asset register where assets are valued at over US$3 billion. .

“Prior to the rail infrastructure valuation, NRZ assets had an estimated value of $400 million, which constituted a gross undervaluation of the company’s assets.” she says.

In June 2019, Ms Zinyanduko said the government, through Statutory Instrument 142 of 2019, had announced that the Zimbabwe dollar would be the sole legal tender in the country and the functional or reporting currency.

“NRZ engineers and technical teams carried out the exercise as of December 31, 2019. “However, the external auditors, when they received the report, forming part of the audit of NRZ’s 2019 financial statements, then recommended NRZ to engage an independent professional evaluator. to establish the true value of its assets to give them some level of comfort on the fair value of the assets,” she said.

With a stronger balance sheet, the railway entity can now borrow to recapitalize its operations. In the past, NRZ had difficulty obtaining lines of credit or loans due to the perceived poor balance sheet which caused the organization to be classified as technically insolvent.

“With a proper valuation of NRZ’s assets, it can be seen that the company is not insolvent as previously alleged. “Such a strong balance sheet will allow NRZ to borrow to support its business and seek financial partners who will pay for its actual value.”

Meanwhile, the parastatal has embarked on a US$3.5 million renovation program of its rolling stock to improve operational efficiency.

The project includes a US$2 million export-friendly railcar retrofit initiative that started in October 2021 and is expected to save Zimbabwe millions of dollars in foreign currency.

The railway organization is grappling with a host of challenges, including a fleet of obsolete rolling stock, an aging railway line and old wagons and coaches.

Last year NRZ successfully embarked on a non-litigation restructuring exercise and proposed a board of directors and management believe this is a sound structure as it is believed this will allow for a maximum utilization of personnel and improve efficiency.

The new structure aimed to remove a very heavy structure and deploy most of the employees in operations with lighter structures in the support services departments. As a result of the exercise, management reassigned most employees on a lateral transfer basis to other areas. of need where the organization would benefit from their service.

Staff training and retraining have been carried out to enable redeployed staff to perform their duties effectively.

Under the new structure, directors have been reduced from six to three, the number of employees from 4,800 to 3,751 currently. “Staff reduction is through natural attrition and a deliberate ploy to fill vacancies of internal staff who are retrained and deployed to needy areas.

“The company successfully cleared legacy salaries with an ex-gratia amounting to $326 million and is now up to date with its salary payments whose monthly bill is currently +/- $400 million,” said said Ms Zinyanduko.