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Zisco debts hits $200m, govt admits blame

20/02/2014 00:00:00
by The Source
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ZISCOSTEEL’S arrears to its workers and domestic creditors has risen to $200 million from $72 million two and half years ago with government failing to meet its end of the deal with Indian steel giant Essar Holdings, an official said on Thursday.

Government agreed to sell 54 percent to the Indian company in November 2010 and under the agreement Essar was supposed to inherit the company’s foreign debt which amounted to $300 million.

The two parties agreed to share the domestic debt which amounted to $72 million then, based on the shareholding structure. The joint venture was renamed NewZim Steel.

Industry and Commerce Minister Mike Bimha told delegates attending a Confederation of Zimbabwe Industry Zim Asset review meeting in Bulawayo on Thursday that Essar managed to meet its part of the bargain but Government failed, resulting in the accumulation of arrears and discontent from the Indian company.

“Since the deal was signed Government has failed to pay any cent and now Ziscosteel’s obligations to local creditors is at $200 million. The money includes salaries for workers, the pension fund and money owed to local authorities and service providers,” he said.

Bimha said the two parties were working out a solution and that the Indian company has committed to its earlier pledge to take over the ailing steel company.

“I was in India two weeks ago and I met the investors. The Essar vice-chairman will be coming to Zimbabwe very soon so that we sign a concrete deal. In the next two weeks I will be able to give you the exact dates.”

He said the government had assured Essar that its investment was still secure.

“We have issued a special grant to Essar for exploration work, we have also given Essar certain claims of iron ore in Buchwa and Redcliff.”

Bimha said there was still a long way to bring back the steel giant.

“A lot of infrastructure has to be rebuilt from scratch. There is need for a new furnace, new coke oven as some of the equipment can no longer be rehabilitated,” he said.


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