Namibia’s partial privatisation of non-core state services appears to be heading up a dead-end trackith the news that railway operator TransNamib will require a R2-billion bailout over the next three years.
It is not only TransNamib that is in serious trouble – its sister company Air Namibia has swallowed up subsidies of more than R3.6-billion in the past 10 years and shows little sign of returning to profitability. Of the 53 state-owned enterprises, only three showed a profit last year.
But as a case study of how not to run a state-owned enterprise, TransNamib is in a class of its own. Its management has been imploding in a very public tit for tat played out between former managing director Titus Haimbili and chairperson of the company’s board, Festus Lameck.
This week, Lameck appeared to gain the upper hand – a local daily reported that Works and Transport Minister Erkki Nghimtina had pleaded with his Cabinet colleagues to refinance TransNamib to the tune of about R2-billion. The rail carrier, which was commercialised under the National Transport Holdings Company Act of 1998, had a debt-to-equity ratio of 89% and could no longer obtain any loans from the open market, Nghimtina was reported as saying.
Gifts and kickbacks
The debt included R260-million for 22 locomotives that TransNamib bought from China in 2004, although the state had taken over the debt on TransNamib’s behalf. TransNamib had not been able to repay this debt to the government, Nghimtina reportedly said.
Amid the rumours of gifts and kickbacks, it appears the Chinese locomotives are at the heart of the managerial collapse at TransNamib. One party has even accused another of smuggling in television sets and other Chinese goods among the shipment of rolling stock.
But the locomotives and rolling stock, bought under strong pressure from former president Sam Nujoma’s government, turned out to be the worst investment TransNamib has ever made. The previous minister of works and transport, Helmut Angula, admitted in Parliament in July 2009 that the locomotives had suffered 265 breakdowns between October 2004 and July 2007, after which they were withdrawn from service. This included the showpiece of Namibian-Chinese co-operation in railway engineering, the Omugulu GwoMbashe Star, which made a weekly run to Ondongwa in the north, the ruling Swapo party’s political heartland.
But the service was slow, with the trip taking 17 hours. Most passengers preferred taxis that did the same 660km trip in nine hours. After the locomotive’s gearbox could not be repaired economically, the train was mothballed in 2007.
Angula blamed this on a failure to assess the suitability of the Chinese equipment for the harsh Namibian climate and a lack of quality control. But, ultimately, it appears that TransNamib was politically co-opted into a deal that has crippled its rail operations.