TransNamib says it’s incurring a N$10 million monthly loss due to delays in securing funding for its Integrated Strategic Business Plan (ISBP) which was coined in 2018, with the aim of turning around the financial fortunes of the rail operator into a profitable entity.
TransNamib needs about N$2.5 billion to implement the plan.
“Truth be told, any strategy to be successful needs resources and one of the key impediments on the slow progress of the implementation, is the time elapsed in securing the funding of N$2.5 billion. The ISBP is delayed for 5 years. It was agreed with the Ministry of Public Enterprises and Ministry of Finance, to rework the ISBP and meet all the conditions of the Development Bank of South Africa and Development Bank of Namibia, which provided an offer of N$2.6 billion over the next 6 months,” said TransNamib board Chairperson Lionel Mathews said on Tuesday.
“As it stands, the source of finance to execute on the New TransNamib Mandate, would primarily come from Recapitalisation, Selling of Non-Core Assets, GRN Subsidies, Vendor Finance. Obviously, any funding of this nature comes with stringent due diligence and conditions. The CEO and his team are hard at work to meet the deadlines and reach financial closure. One of the conditions was the approval by the Ministry of Finance. The restructuring of TransNamib enjoys the full support of the Ministry of Finance, Public Enterprises as that of Works and Transport.”
Mathews said an assessment conducted by the treasury had highlighted some risks and concerns, and thus suggested that funding should be split and given in portions.
“The CEO and his team are exploring options to close the first N$600 million or so, to get the restructuring and turnaround going,” he said.
Mathews said, N$175 million had been secured from the Ministry of Finance which has partly been disbursed, “and this is one of the short-term goals to revive the falling company.”
“TransNamib has lost a significant value of cargo to road transport over the years and gaining back just 10%-20% will yield business profitability, combined with consistent and stable customer service and optimizing operations and engineering and a symbiotic operational strategy.”
TransNamib’s strategic plan had hoped to make a financial breakthrough in 2023, attaining a trustworthy customer experience by transporting 3 million metric tonnes of cargo by 2023.
Meanwhile, TransNamib is still facing an upheaval of a planned strike as workers are set to vote in a secret ballot for a strike on 12 August.
The strike should have taken place on 18 July but was shelved following a court order, after TransNamib approached the court arguing that the Namibia Transport and Allied Workers Union (NATAU) , which is the bargaining union, materially breached the negotiation rules.
CEO Johny Smith, however, maintains that the rail operator is in no financial position to give any salary increments, rather he pleaded with the union and workers to evaluate and understand the dire consequences the industrial action will have on the entity.
“Throughout our negotiations we have been opening our book to show them where we stand. We implore our employees to remember that after much grappling we have secured the needed funding to improve our capacity in terms of rolling stock,” said Smith.
He hopes in the next 9 to 12 month the company might improve its financial position by utilising funding from the government this year to improve rolling stock capacity and infrastructure conditions.
