THE National Railways of Zimbabwe (NRZ) is technically insolvent, the comptroller and auditor general, Mildred Chiri has said.
In a report presented to Parliament this week, Chiri said most of the parastatal’s equipment has long outlived its use-by date.
The government auditor also noted that NRZ was afflicted by an ineffective tendering process.
“The National Railways of Zimbabwe is not in a sound financial position as evidenced by a total loss of US$34, 979 million; a negative working capital position of US$22,916 million and a net cash outflow to operating activities of US$5,782 million,” Chari said.
“This means that NRZ is technically insolvent. The National Railways attained a gross loss of 22percent during the year mainly as a result of the 25 percent gross loss on freight services.
“This is mainly because of the low business volumes during the year as the average operating capacity for most industries averaged at about 35 percent. The level of staff costs to revenue of 71 percent is unsustainable. NRZ currently has about 8,600 employees.”
Chiri said a review of the tender files processed revealed that there was no evidence of checking the reasonable-ness of the prices quoted by suppliers adding deficiencies in the adjudication process has resulted in unrealistically high prices being accepted by the tender committee.
The state firm was also said to be saddled by aged assets resulting in constant breakdowns and unsustainable repair costs.
“The National railways have been operating without a board of directors since the expiry of directors contracts in June 2009,” she said.
“Consequently decisions on steering the entity were being made by the general manager and the permanent secretary in the ministry of transport and communications.
“NRZ is a very big corporate that requires a panel of directors, balanced in terms of expertise skills and background to steer it forward.”