Zambia Railways Limited (ZRL) recorded recurring operating losses in 2023 and 2024, largely driven by high operating costs, ageing equipment and liquidity constraints, according to a review of the company’s financial performance by the Auditor General.
ZRL reported operating losses of K177.8 million in 2023 and K137.6 million in 2024. Operating expenses exceeded revenue in both years, accounting for 115% of total revenue in 2023 and rising to 128% in 2024.
The elevated costs were mainly attributed to the lack of investment in locomotives, with the current fleet averaging 40 years old, significantly beyond the manufacturer’s estimated useful life of 25 years. As a result, repairs and maintenance costs for rolling stock and rail trucks doubled, increasing from K32.9 million in 2023 to K65.7 million in 2024.
The company also recorded persistent liquidity challenges, with negative working capital of K1.18 billion in 2023 and K1.17 billion in 2024. The negative position affected ZRL’s ability to meet its financial obligations as they fell due.
In addition, Zambia Railways failed to insure its rolling stock valued at K447.5 million, contrary to the requirements of the Public Finance (General) Regulations.
Meanwhile, the Tanzania-Zambia Railway Authority (TAZARA) also reported financial and operational challenges over the period from the 2022 to 2024 financial years.
During the three-year period ended 30 June 2024, TAZARA budgeted to generate income of K2.63 billion from freight, passenger services, rentals and other sources. However, actual income amounted to K1.07 billion, representing only 41% of the budgeted target and resulting in a shortfall of K1.56 billion.
The accidents led to the closure of the main railway line for a cumulative 6662 hours and 43 minutes. This resulted in maintenance expenditure of approximately US$7.04 million and an estimated revenue loss of US$3.3 million.
In November last year, Zambia, Tanzania and China announced they had reached an agreement, which will see China modernising the railway at a cost of U$$1.4 billion. TAZARA runs from the central Zambian town of Kapiri Mposhi to the port of Dar-es-Salaam in Tanzania on the Indian Ocean.
The works on the 1 860 km railway line will include the rehabilitation of stations, the track, tunnels, bridges and construction of other infrastructure along the corridor and is expected to raise freight volumes on the line to 2.4 million tonnes annually from 100,000 tonnes currently.
