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Tuesday, July 23, 2002 - Web posted at 3:16:56 pm GMT

TRANSNAMIB is going to provide the first severe test of the Government's pledge to make parastatals pay their own way, says the Institute for Public Policy Research (IPPR).

The economic research body said new Managing Director John Shaetonhodi will face a tough task in making the corporation profitable.

Whether TransNamib can be turned around in three years, with the building of the northern railway extension and without reducing the workforce, was "open to question," IPPR said.

Shaetonhodi, then acting MD, claimed last October that there would be no job losses at the corporation, according to the IPPR.

The research body said it was difficult to assess the company's problems in the absence of the latest financial statements.

But increased competition, political interference and the problems of delivering transport services to a small and dispersed population, most probably all played a role.

Cabinet last month instructed Minister of Finance Nangolo Mbumba to table the annual reports of TransNamib for 2001, 2000 and 1999, which have yet to see the light of day.

The IPPR said TransNamib had the possibility of becoming only a "marginally profitable operation" while in State hands. "There is little justification for the State to own commercial entities than can be provided by a competitive market," it said.

TransNamib was established in 1987 and from 1990 to 96 made some pre-tax profits.

Then in 1997 and 98 it posted losses of N$68 and N$50 million respectively. In 1999, the last year the corporation submitted a financial statement, it posted profit of N$12 million, but only after a Government contribution of N$172 million.

In late 1995 the entire TransNamib Board, of which new MD Shaetonhodi was a member, was fired by Government following the recommendations of an independent task force.

The IPPR pointed out that soon afterwards the corporation began making substantial losses.

In the early years, only the air division, in effect Air Namibia, struggled to turn in a profit. In latter years, Air Namibia was to prove an ever increasing drain on finances, until the two companies were separated in March 1999.

The corporation was restructured in 1997 into three autonomous subsidiaries (Air Namibia, TransNamib Transport and TransNamib Properties) owned by new company TransNamib Holdings.

Ever since then, profitability has declined substantially.
A presidential commission of inquiry was held into TransNamib's operations from January 2001. In August 2001 the entire TransNamib board was sacked and replaced by the former members of the commission.

The IPPR quoted Minister Helmut Angula's report on State Owned Enterprises as saying TransNamib's top five managers received average total salary packages of N$564 000 in 2001.

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