Zambia Railways Limited Chief Executive Officer Christopher Musonda says there was no plan that existed on how the company was expected to use the US$120 million which was allocated to the sector from the Eurobond that government acquired.
Musonda said the only plan which exists is the one on how the money was used after it was deposited in the company account.
The Zambia Railways Chief Executive officer said this when he and his team appeared before the parliamentary committee on Parastatal Bodies on Thursday.
He was responding to a question from Zambezi East UPND member of parliament Brain Kambita who wanted to know what plan Zambia Railways put in place before receiving its portion of the Eurobond.
“In terms of the plan prior to receiving the money, I will not think it existed because the cancellation of the concession itself was not planned for. It was announced and the following hour, people moved in, so I don’t think there was a plan to basically cater for that utilisation but the plan which is there is the plan which was now formed after the money was given, that we have. And how money was allocated to that plan, that we have but the pre-plan where we can say we pre-planned this and we adjusted to allocate like this, that may not be existing with Zambia Railways,” Musonda explained.
“The nature of takeover, the nature of the money, its not the money which people had gone to the bank, do the feasibility study, justifying cost benefits, I don’t think it came in that manner. So that was the situation but the plan on how the money was utilised, I think we have. A pre-plan I don’t think it exists with us.”
Musonda also said that the management which was there at the time of receiving the Eurobond was different from the current one.
“As you know Eurobond came in after the cancellation or nullification of the concession. That is the first thing, and then within few weeks, that money was given to Zambia Railways and other parastatals. At the time that money was given, it hit into the account, Barclays bank, and the management then tried to find out how they would utilise this money. It’s a pity but we cant run away from the responsibility. Very few people in current management were even in the company that time but we still have to explain. But from what we have learn’t is that the money was given to Zambia Railways just as there was money which was given to Zesco, and to other parastatals and the management started looking at ‘how do we utilise this money’ when the money was already sitting in the accounts,” Musonda explained.
“Now in terms of what we have done with that US$120 million Eurobond, almost 75 percent of the US$120 million was allocated to the infrastructure, meaning truck and truck related equipment, things to do with making a road. 75 percent of that money was allocated to that and also strengthening some lines. In terms of locomotive rolling stock, I think almost 12 percent of that amount was allocated to locomotive rehabilitation and wagon rehabilitation. 23 per cent was allocated to heavy equipment,” he said.
And Zambia Railways Director of Finance Chungu Sikazwe explained that the company would start making profit in two to five years.
“On the repayment of the euro bond, today we are currently loss making as the Honorable MP had stated but with our five year projection and new strategies that are being put in place, we are projecting to be profitable three to five years from now. In the first few years, we still post a loss but as we go into year three to five, the profit starts coming in, we will be able to contribute to the sinking fund which we are being employed by the shareholders IDC. That is the fund that shall be used to pay back the Eurobond,” said Sikazwe.