TRANSPORT minister Joram Gumbo on Tuesday told Parliament that government had agreed to warehouse the $323,5 million National Railways of Zimbabwe (NRZ) debt to ensure that the parastatal’s legacy debts do not drive away potential investors.
BY VENERANDA LANGA
Responding to a report by the Parliamentary Portfolio Committee on Transport on an inquiry into NRZ’s turnaround strategy, Gumbo said of the $323,5m warehoused debts, a total of $98m comprised salaries owed to workers.
Warehousing of a debt is delaying payment of a large percentage of the mortgage.
“The legacy debts of the NRZ are being warehoused rather than being taken over by government and the NRZ is working with the Ministry of Finance and Economic Planning to develop credible and bankable debt retirement plans,” Gumbo said.
“The NRZ’s recapitalisation strategy, in fact, aims to avoid dependence on government, and the funding structure currently being negotiated with the DIDG Transnet consortium does not call for government sovereign guarantees and neither does it depend on the NRZ balance sheet to secure borrowings, but is predicated on the Transnet balance sheet and other financing instruments being structured by all parties concerned,” he said.
Gumbo said warehousing of the NRZ debt would ensure that investors come on a clean slate, adding that the warehoused debt would be liquidated over a period of time using funds that the NRZ would get after recapitalisation.
On the reduction of salary to revenue ratio, Gumbo said the measures, which management took over the years, included a freeze on recruitment and natural wastage, where NRZ had not been filling vacant posts that arose when employees exited, unless if it were a critical post.
“The NRZ retrenched about 444 employees in 2015, and there has been reduction in overtime and other related employment costs and automation processes,” he said.
“Through these measures, the salaries to revenue ratios have progressively reduced in the last three years. In 2015, the salary to revenue ratio was 93%. In 2016, it came down to 92% and in 2017, it came down to 80%.”
The minister said management also reviewed the percentage of salaries being paid to workers from 50% to 60%.
“Another review is planned for February 2018 to take this to 70% or 80%. Further reviews will be carried out in 2018 as performance continues to improve. The employees’ salary arrears are part of the NRZ debt to be warehoused by government and the organisation is currently engaged with the Ministry of Finance over its plans to liquidate the warehoused debt,” he said.