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Zambia Railways Faces K4 Million Losses

Zambia Railways Limited (ZRL) is grappling with significant challenges in its recapitalization and modernization endeavor, as revealed by recent reports indicating losses amounting to K4 million.

The project, aimed at revamping the country’s railway infrastructure, was envisioned to enhance efficiency, safety, and revenue generation for the company.

However, the initiative has encountered various setbacks, including safety concerns, financial mismanagement, and delayed deliveries, leading to prolonged transit times, decreased freight volumes, and substantial financial losses.

A critical issue affecting the project is the deteriorating state of railway infrastructure, comprising tracks, bridges, culverts, and drainages. A review of the 2022 Safety Report by the Auditor General’s office highlighted a significant increase in safety occurrences, primarily attributed to track failures.

Consequently, sections of the rail network were subjected to temporary speed limits, resulting in extended transit times for passengers and cargo.

The prolonged transit times adversely impacted ZRL’s freight hauling capacity, leading to a shortfall in planned freight volumes and anticipated revenue generation. Delays in the delivery of essential equipment, such as wagons from Transnet – Freight Rail (TFR), further exacerbated operational disruptions and financial losses.

Financial mismanagement has also plagued the recapitalization and modernization project. ZRL’s contract with Team Sweden Railways (TSR) for rehabilitation and modernization faced financing challenges, raising doubts about the company’s ability to fulfill contractual obligations within stipulated timelines.

The delayed settlement of payment certificates resulted in the suspension of project works by the contractor, hindering progress and contributing to the project’s overall completion rate of 84% as of August 31st, 2023.

This delay has impeded the execution of Phase 2, which encompasses extensive rehabilitation works and the procurement of essential locomotives and wagons.

The challenges faced by Zambia Railways underscore the urgent need for comprehensive measures to address safety concerns, enhance financial management practices, and expedite project implementation.

Addressing these issues is crucial to realizing the objectives of the recapitalization and modernization project and ensuring the efficiency and sustainability of Zambia’s railway infrastructure.

SOurce: Zambia Business Times

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