TransNamib seeks N$15 billion in funding
State rail operator, TransNamib, says it requires at least N$15 billion to rehabilitate the country’s entire rail infrastructure and has ruled out mortgaging its assets to fund the process.
TransNamib has properties dotted around the country, including vast tracts of land.
According to an evaluation carried out on TransNamib’s portfolio, the company has property assets valued at approximately N$2.4 billion.
“Our liabilities are quite high; I cannot give you the precise figure at this moment that’s why we need some of our debts to be written off so that we are able to generate some revenue. We have assets all over this country; we have facilities, we have vehicles, and we have stations,” Acting Chief Executive Officer, Hippy Tjivikua told the Windhoek Observer.
“Our balance sheet is not that positive, we have high debt so we are technically bankrupt, which is a risk and we cannot go to any financial institution if we are insolvent and still expect to receive money through that route.”
Tjivikua said TransNamib is looking at entering into public–private partnerships to fund the required infrastructure.
“The coming of PPPs will open up opportunities to bring in partners within the private sector who will bring in funding. There are a lot of goods to be transported not only in Namibia, but Zambia, Angola, DRC and Botswana,” he said.
“We have been in the industry for a long time; we know how to run this business.”
Tjivikua said the company remains viable, but called for the restructuring of its operations.
“The rail business is a viable business, but going forward the company needs to be restructured to focus on its core business. I think we are doing quite a lot of other things that are not part of our core business such as road transport, which is not competitive anymore. Our suggestion is to let go of those non-core businesses and just focus on rail,” he said.
Tjivikua, however, said the state rail operator will not suspend its passenger business, which operates only three services: Karasberg to Windhoek, Windhoek to Walvis Bay, and Tsumeb to Oshikango.
“As for the passenger service; we do it as a social responsibility, we do not generate profit. Even if you bring a third party, they will not make money out of it because we have a low number of passengers travelling with a train and the charges per passenger are very low,” he said.
Tjivikua said the rail company requires at least 80 locomotives to operate efficiently, with its current fleet now old.
“Our own locomotives are extremely old, maybe about 60 years old, so it’s not recommended. These locomotives are meant to run for 25 years and be decommissioned. We do not have the capacity to get new locomotives. We only have general electric locomotives that are operating,” he said.
With regards to on-going rehabilitation work being carried out on the 392 kilometre Kranzberg to Tsumeb railway line by D&M Rail, the operator of its joint venture company, Namibia Rail Construction, Tjivikua said he is happy with the progress to date.
This comes as D&M Rail, Namibia’s sole railway construction and maintenance company, has struggled to access payment in some instances, a position that is impacting on its operations.
“In our case, uncertainty of funds plays a major role as we have agreements in place with employees and suppliers of very expensive equipment on hire from South Africa, such as the ballast regulator and ballast tamping machine. These need a certain output otherwise you will face huge losses on such machines,” D&M Rail Managing Director, Dawie Moller told the Windhoek Observer during a recent tour of the project.
D&M Rail has to date rehabilitated 183, 4 kilometers of the Kranzberg-Tsumeb railway line, a process that involves replacing metal railways sleepers with concrete sleepers, changing ballast and replacement of rails on some sections.
Moller said the payment interruptions sometimes result in delays being extended to suppliers, causing the company to incur various penalties.
“That is bad for cash flow and even more so if material was procured and suppliers need to be paid within 30 days. The moment you process an invoice you are liable to pay VAT for money not yet received or money to be received only after 60 days or whatever delay might take.
“PAYE needs to be paid in time. Most importantly is that you must manage cash flow in such a way that salaries are on time; otherwise you sit with an unhappy work force. This creates conflict between employer and employee which is not desirable,” Moller said.
“Important role player in the queue is the Receiver of Revenue that wants their slice of the cake and if they are not being paid on time you face heavy penalties. Nowadays with good standing from the Receiver to accompany any claim, this is quite challenging if payments from debtors are delayed.
“We are not always sure what the reason for delay is, but up to now we have managed to continue our operations without stopping work,” he said.
Moller said the contract for the railway project will expire once the rehabilitation works have been completed.
“The contract is not open ended, but it’s for the particular project and it will be concluded when the rehabilitation has been completed. This will again depend on the availability of funding,” he said.
Moller said the rehabilitation of the country’s rails is key in the economic growth of the country, with the northern areas set to get a boost with the eventual completion of the railway line which will link Namibia and Angola.
For the past 17 years, D&M Rail has serviced the railways of the Namibia Ports Authority, Rössing Uranium Mine, Dundee Mining, NamPort, Namib Mills, Ohorongo Cement and Chico, a Chinese firm.
In 2005, D&M Rail completed the construction of the 50 kilometer permanent way between Lüderitz and Aus.