NRZ given 30-day ultimatum to clear a US$9.6m debt

Zim Now Writer

Belgian company Hethimex, has given the struggling National Railways of Zimbabwe a 30-day ultimatum to pay its US$9.6 million debt or face legal action.

The debt arose in 2003 when the Belgian firm and NRZ went into a deal that resulted in the State-owned rail company purchasing parts for general motor locomotives using a revolving credit facility.

A report to the Parliamentary Portfolio Committee on Transport suggests that the NRZ has failed to make payments on the debt, forcing Hethimex to take urgent action.

Reads the report in part: “NRZ had been paying and continued to receive the spares, however, when the country re-introduced the ZWL (Zimbabwean dollar), most of the company’s clients opted to pay in ZWL, resulting in NRZ failing to service the account.

“The debt at one stage ballooned to US$12 million and the management tried to reduce the debt and paid US$2.5 million in instalments.

“Due to non-payment of instalments by NRZ in 2022, Hethimex decided to demand full payment of the US$9.6 million outstanding and failure of which they opted to have the matter taken to arbitration at a court in London,” the report reads.

Government then agreed on a bail-out for NRZ, through a loan, and served as the contract’s guarantor, but however, has not kept its promise, prompting Hethimex to issue a 30-day notice of arbitration on January 6, 2023.

According to the report, any government asset would be attached to settle this debt since it acted as guarantor in the deal.

This debt is one of the major reasons why it is difficult for NRZ to acquire finance for recapitalisation.

Some of the debts owed by NRZ, which are listed in the report include the following:

- NRZ owes €2.7 million to the Department of International Development in Central Africa, which was used to start electrifying the Dabuka to Harare railway line in 1983.

- Natexis Banque, a French-based lender, is owed €956 398 which was used to purchase 30 electric locomotives that ran along the Dabuka to Harare railway line.

- German investment and development bank Kreditanstalt Fur Wiederaufbau is owed about €4.05 million which was used to purchase 30 locomotives.

- The New Limpopo Bridge Project Investment is also owed around US$3 million by the NRZ.

- Interim Solution Resources is owed about R68.697 million (US$3.4 million) which was used to pay overdue transportation and equipment hire fees.

- NRZ owes Mozambique Railways a total of US$4.96 million. 

The parastatal has since asked government to take over its debt.