TransNamib to borrow against assets
TransNamib is 30 years from where it should be, according to its CEO Johny Smith.
11 March 2020 | Transport
Government has made it clear that it will not provide any public funding for the business plan, which aims to modernise the company. A valuation exercise undertaken by TransNamib has placed the value of its assets at over N$2.6 billion. Company CEO Johny Smith recently told Namibian Sun's nightly 'Evening Review' show that the enterprise was 30 years behind from where it should be. “There is still a lot to be done,” he said before going into the details of the business plan, which TransNamib has said should steer it to break-even point by 2023 and towards the road to profitability. One of the first things we have done is to get the five-year business plan implemented. For the business plan, we are not going to get any money from treasury so we have to use our property as leverage to borrow the N$2.5 billion,” Smith said.
TransNamib will be one of the first Namibian public entities to use a significant portion of its assets to fund its plans, an idea long mooted by the line minister for commercial entities, Leon Jooste.
“It is going well; hopefully we will get a positive answer in the next few months,” Smith said.
According to him, the properties to be used as collateral have been identified, but he ruled out the sale of any assets for now.
“The first stage really was to do a valuation exercise of our properties, so that was completed in 2018, and therefore we need to leverage some of the property eventually to cover the loan. We still do not have a plan to sell but just to use it as a guarantee.” With locomotives forming the core of TransNamib's operations, Smith said it found the procurement of rolling stock frustrating.
Smith complained that the slow public procurement process is a big headache.
He said TransNamib's procurement of locomotives was held up for seven months by the Central Procurement Board.
“Acquiring locomotives has been one of the biggest frustrations of the year because we put out a tender that has to go through the Central Procurement Board of Namibia. At least now it seems that there is some movement on it.
“It makes it difficult because the cost of even one locomotive is above the approval level of me, the accounting officer,” he added.
The rail operator is also setting its sights on reviving passenger train services between Windhoek and Ondangwa. TransNamib tested the consumer market for the route and the outcome proved satisfactory, Smith said. The challenge was now to make inroads into the freight market to complement planned future services to the north.
“What we said last year is let us see if we can test the passenger market between Windhoek and Ondangwa. It actually went quite well but we have to spend some more time. We will for the Easter season run a train or two but it is all about the funding availability,” he said.
Part of the shake-up at TransNamib involved reintroducing the Desert Express luxury train, he said.