Windhoek-It is now up to Cabinet to decide whether or not to wind up the Roads Contractor Company (RCC) and national railway company TransNamib, thus concluding an issue that has hitherto divided Cabinet ministers.
The fight over whether or not to liquidate the national railway company TransNamib and the RCC reached a crescendo nearly two weeks ago, with a special meeting called at State House to deliberate on the matter in the last week of April.
The meeting, which was attended by the ministers of finance, public enterprises and works and transport, resulted in some sort of consensus emerging that whatever the interventions to revive the two state-owned enterprises, winding them up should not be an option.
When approached for comment on the meeting Presidential Press Secretary Albertus Aochamub said the meeting was nothing special, but an ordinary meeting between ministers and the Presidency, where no decision was made, because only Cabinet makes such decisions.
“It was just another working session, a consultation between the ministers and the president, appraising the president on the road thus far,” he said before adding that “a meeting like that cannot make decisions”.
According to documents availed to New Era, Public Enterprises Minister Leon Jooste has placed on the table his ministry’s detailed plans to liquidate the RCC and cut up TransNamib so that it would become a lean corporation.
In his motivation to close down RCC and privatise TransNamib, Jooste informed his Cabinet peers of the analysis on the viability and importance, if any, of the two institutions. RCC’s strategic and business importance to the Namibian economy he described as “marginal to none”.
“After careful consideration for the social, political and economic impact and weighing the rebuilding of the RCC versus the winding up [liquidation] of the RCC, we have come to the conclusion that the winding up of the RCC is the preferred option,” read part of his motivation letter.
However, Jooste seemed to have hit a snag – as not all his cabinet colleagues agreed with the given assessment of the two institutions and reasons for their intended closure.
According to the said documents seen by New Era, the Office of the President is siding with Cabinet members who are opposed to the idea of closing down TransNamib and RCC, and has in fact asked that Jooste halt any plans to close RCC and rather look at capacitating the institution.
Another objection is based on the fact that the Public Enterprises Ministry has not yet been, on paper, empowered to take on the functions of directly overseeing the state-owned parastatals.
Such functions are still with the line ministries, who would also be the ones to submit proposals and recommendations to Cabinet if any state-owned company needed to be wound up.
Jooste’s motivation letter came with a comprehensive business analysis that was presented to members of the Cabinet Committee on Treasury on March 13.
His team of technical advisors compiled the voluminous document, labelled ‘MPE [Ministry of Public Enterprises] Position Paper’. It argues that in the case of the RCC the ministry determined that the only way to continue with the RCC is to undertake “a complete commercial overhaul” or to rebuild the company, involving “an entirely new business model transforming RCC from a subcontracting, joint venture company into an independent competitive contractor”, reads the document.
TransNamib was rated as of strategic importance, but the minister still motivated that it be completely overhauled through privatisation for it to sustain operations. “The main difference is that TransNamib has major strategic significance and the benefit of a proper functional TransNamib to the economic growth of our economy is unquestionably beneficial,” stated the document.
The Public Enterprises Ministry says it is more concerned “over the current approach to the refurbishment and upgrade of the rail infrastructure, which is a critical enabler for the transformation of TransNamib”.
“It will remain extremely difficult for TransNamib to deliver competitive, reliable bulk freight transport services considering the current state of the infrastructure,” the report noted.
However, the future of the two institutions hangs in the balance. Although the Public Enterprises Ministry has proposed alternative approaches to resolving the problems of both institutions, it appears to disagree with the business plans, the costs and implementation plan submitted by the two companies. RCC is the state-owned enterprise that undertakes work related to the construction and maintenance of roads, or any other construction works, in accordance with sound and generally accepted business principles.
It is currently involved in the construction of buildings, bridges, waterworks, dams, reservoirs, tunnels, canals, aqua ducts, irrigation works, harbours, aerodromes and railway infrastructure.
Nevertheless, the Public Enterprises Ministry says RCC has never made a profit and billions of dollars of capital outflow has been the net result.
“The strategic business plan requests only N$300 million, which is clearly not enough and will merely result in “buying more time” for [RCC]. The strategic business plan does not even illustrate how this amount was calculated,” the ministry says in its submission.
TransNamib is the state-owned railway enterprise organised as a holding company, to provide freight by rail and road, as well as passenger services. It operates the country’s entire rail network.