TransNamib business plan ripped apart

The TransNamib board has not found the going particularly easy as far as the planned implementation of its new strategic business plan is concerned.

The board paid President Hage Geingob a courtesy call this week to lobby for support for the implementation of its business plan which has been criticised by the Cabinet Committee on Treasury.

Part of its plan is the disposal of non-core assets which includes houses, the Swakopmund Hotel and its fast-freight subsidiaries Trans Hex and OPX.

The board also asked for the committee to consider writing off a N$410 million Chinese loan.

Speaking to Geingob, board chairman Paul Smit said it was imperative for TransNamib to follow through with its business plan if it were to successfully turn around the ailing rail operator.

“If we don't take these decisions, there is no way we can take TransNamib out of its current situation,” Smit told Geingob.

Motivating the need to sell off non-core assets, Smit said the board had reasoned that the property did not serve TransNamib's business objectives. “The property will not be required for the next 100 years,” Smit said. The sale would generate some N$800 million, Smit said.

“We don't want to sell the property immediately,” Smit said.

Finance minister Calle Schlettwein informed Geingob that the committee had raised concerns about TransNamib's intended business plan, saying if the government were to commit immediately it would need to inject approximately N$4 billion over a three-year period.

“If we say yes to this business plan, we are saying yes to a funding plan of N$4 billion over three-years,” Schlettwein said.

He added that there had to be surety that TransNamib would become an efficient logistics company.

“We prefer a business plan that tells us to move cargo from road to rail competitively. The second issue we looked at is the proposal to leverage assets. We assumed that not all assets are equal,” Schlettwein informed Geingob. Commenting on the issue of the Chinese loan, the committee had not deemed the matter to be important. “We were not sure whether this was a priority; N$410 million can be spent differently,” Schlettwein said.

Geingob interjected and asked what it meant for TransNamib, to which Schlettwein responded: “Comrade President, what it means is that TransNamib will not have the ability to take up loans of N$410 million.”

According to the finance minister, it was also suggested that a substantive CEO be appointed to implement the business plan. A submission had been made to the cabinet while an announcement will be made soon.

Public enterprises minister Leon Jooste said the there was no way the cabinet would wilfully approve the business plan immediately.

“The days of approving business plans we are not sure of are a thing of the past,” said Jooste.

According to Jooste, it was also imperative that the board composition be strengthened.

It was also revealed during discussions with Geingob that some employees had warmed to the idea of early retirement, with TransNamib board member Michael Ochurub saying N$135 million would be required for what he called “nice retirement packages”.

At present, TransNamib owes General Electric N$10 million for the purchase of locomotives while N$100 million is owed to TransNet for the lease of locomotives.

TransNamib has in the meantime been tasked to rework certain aspects of its business plan. A new CEO will be announced in the next two to three weeks.