• September 24th, 2020

On the spot - Smith goes full steam ahead with overhaul plan

Substantial progress is being made at the national rail services operator, TransNamib, which recently successfully hosted its first annual general meeting (AGM) in seven years. 
During this recent AGM unqualified audits confirmed that during the 2019/2020 financial year, TransNamib in fact increased its revenue to N$517 million, representing a 10.5% year-on-year increase that signifies the company’s best performance for the last 10 years.

Much of the recent success has been attributed to relatively new CEO Johny Smith, who took over the reins of the beleaguered state-owned-enterprise in February 2018. 
This week New Era’s (NE) senior business reporter, Edgar Brandt, sat down with Johny Smith (JS) for an exclusive interview: 

NE: What were some of the major challenges you identified when you took over the helm of TransNamib in February 2018?
JS: In short, the company is 30 years behind as a business and also there has been no proper management here at the company. There was a significant backlog in maintenance. We still have what I call ‘the sins of the past’, which show that over the past 10 years there has been over N$1 billion of losses in totality. We have tried for the last two years to see what we can put in place in the short-term, medium-term and of course, and however difficult, we also have to focus on the long-term for whatever decisions we have to take about the business.  

NE: Are there specific operational challenges you would care to comment on and that you and your team have addressed?
JS: Operational challenges are a few. In total, 90% of our locomotive fleet are more than 50 years old. We have refurbished and refurbished and refurbished so one thing we can be assured of is that every day one of these locomotives will break down because normally the lifespan of a locomotive is 25 years. Also, in terms of being able to provide a reliable service to the customers; this is a big challenge. And then, because for at least seven years before I started here there was no training and development for staff so we have a lot of gaps in terms of filling this need so that we can ensure going forward we improve our overall business. 

NE: Do you envisage upgrading or procuring new locomotives?
JS: Part of our five-year business plan is that we need to re-manufacture about 33 locomotives so we have been working with the Procurement Board for the last year so that we can at least get that out into the public in terms of a tender. Hopefully that will happen within the next few months because it has taken too long in terms of these bureaucratic processes, which has also delayed the implementation of our business plan. Then, we also plan to put out a tender for 10 new locomotives, hopefully by early next year. 

NE: What investment will the new and remanufactured locomotives constitute and how will this be financed?
JS: The 10 locomotives plus the 33 locomotives we have to re-manufacture will cost about N$1.5 billion. We will have to get a long-term loan and we are already busy with financial institutions in terms of that and the process is progressing very well. 

NE: It was recently reported that you need about N$2.5 billion for the five-year business plan. Is that figure correct and where will you get this money?
JS: Yes, it is about N$2.5 billion where N$1.5 billion will be for the locomotives and the rest will be for other equipment and other requirements that we have set for ourselves as per the business plan. We hope to secure all these funds through a long-term loan for which we have approached local financial institutions which are partnering with a regional institution. 

NE: There is a perception that TransNamib is moving more towards freight and away from passenger rail services. Is this perception correct?
JS: I think the perception is completely wrong because what we have done for the last two years is that we actually conducted a trial run in December for passenger services to the north, to Ondangwa, meaning that for the financial year we transported more passengers compared to the previous year. What we are saying is that we need to build our freight business first before we can extend our passenger services as it always has to be a combination of the two. To run passenger trains alone; we simply don’t have those volumes in Namibia so it is very difficult to do it like that. We are going to start working on a strategy towards the end of the year to determine how we are going to combine it but for now our focus is freight. 

NE: One of the strategies proposed by previous TransNamib management was to sell off some of the company’s properties across the country. Are you still pursuing this strategy?
JS: At this stage we don’t have a strategy for selling our properties. We would rather use the property as security for borrowing. And, much of our properties are not at the desired level in terms of the maintenance backlog so it is going to be difficult to sell property like that. Also, looking at the property market it is not a seller’s market right now. Much of our property is actually what we can optimise for our core business in terms of rail operations. 

NE: You previously mentioned you want to see TransNamib operating as a profitable company within the next two years. Are you on schedule with the performance target?
JS: If you had asked me that nine months ago, I would have said yes. At the moment we are not really on target but we are getting ourselves geared to that because we only appointed the full executive team on 1 February. For the last two years I have been working full-time to ensure those executive gaps are filled. 

NE: It is estimated that N$15 billion is needed for both maintenance and expansion of Namibia’s rail network. What is the progress with this?
JS: In Namibia the railway infrastructure belongs to the government and we are only responsible for minor maintenance. Whenever there is a rehabilitation project, like we have now between Walvis Bay and Kransberg, that must be done by government. So, government has taken out that loan from the African Development Bank. In totality, we are working with the government to identify priorities and according to that government provides for that within the national budget for upgrades and new railways in the future. 

NE: What do you want to see in terms of progress for railway expansion and overall maintenance?
JS: Railway infrastructure upgrades is a long-term business because once you put a railway in place it can be there for more than 100 years. What government has invested in our road infrastructure since independence is quite a good investment. I want us to look at rail in the same way, to also build up the railway infrastructure within the next 15 to 20 years so that we can carry more freight and more passengers on faster trains. 

NE: There has been talk about the establishment of a high-speed rail network for Africa. Do you think such a project will solve some of Africa’s logistics challenges?
JS: Yes, of course. It is a long-term prospect but definitely Namibia is part of that and I have participated in some of those discussions. 
I think it is a good initiative because it is long-term and we would require it to link the 54 countries on the continent because transport and logistics remain one of the biggest challenges in Africa. 
There was a meeting last week at the African Union and there have been other meetings accordingly so there are already certain sections of the (high-speed) railway in place.
This is about focussing on those countries where the network is not in place. 
If you look at Namibia, most probably the way they are planning the Cape to Cairo or Cape to Tunis line, what we have to put in place is the connection from Grunau up to the border because the rest of the line is already in place up to the Angolan border. It is not that Namibia must start from the beginning but it is about upgrading the line. 
The best would be to focus on upgrading certain sections but it should not be seen as an entirely new line. 

Edgar Brandt
2020-03-13 09:51:53 | 6 months ago

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