Hethimex, a Belgian corporation, has given the National Railways of Zimbabwe (NRZ) 30 days to pay its US$9.6 million debt or face legal action.
The debt emanated from a 2003 deal that Hethimex and the state-owned rail company entered resulting in NRZ purchasing parts for general motor locomotives using a revolving credit facility, Zimbabwe Independent reported.
A recent report to the parliamentary committee for transportation suggests that the parastatal has failed to make payments on the debt, which has forced 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 government agreed to bail out NRZ through a loan and served as the contract’s guarantor but the government has not kept its promise prompting Hethimex to issue a 30-day notice of arbitration on January 6 2023:
The report further states that any Zimbabwean government asset would be attached to settle this debt since the agreement was guaranteed by the government.
The burden of the debt —the principal amount plus interest— is one of the major issues making it difficult for the parastatal to acquire finance for recapitalisation.
Some of the debts listed in the report:
1). NRZ owes €2.7 million to the Department of International Development in Central Africa. The money was used to start electrifying the Dabuka to Harare railway line in 1983.
2). 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.
3). German investment and development bank Kreditanstalt Fur Wiederaufbau is owed about €4.05 million which was used to purchase 30 locomotives.
4). The New Limpopo Bridge Project Investment is also owed around US$3 million by the NRZ.
5). Interim Solution Resources is owed about R68.697 million (US$3.4 million) which was used to pay overdue transportation and equipment hire fees.
6). NRZ owes Mozambique Railways (CFM) a total of US$4.96 million.
The NRZ has since asked the government to take over its debt.