Govt seeks loan to pay off $200m Zisco debt

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GOVERNMENT has assured Essar Africa that it will secure a loan to pay off Ziscosteel’s $200 million domestic debt to accelerate resumption of work at the fallen steel giant.
The State inherited the debt when it sold 54 percent shares in Ziscosteel to the Indian company in November 2010, while Essar took over the company’s foreign debt which amounted to $300 million.
But industry and commerce minister Mike Bimha last month said the debt, which was $72 million at the time of the agreement, had ballooned after government failed to settle its side of the bargain.
On Thursday the minister toured Ziscosteel, now New ZimSteel and held discussions with Essar and the firm’s management.
“We just wanted to find out how they are operating at Zisco and to assure them that the government and (Essar) are still committed to put them back on track,” Bimha told The Source on Friday. He declined to give further details of the meeting.
But sources who attended the meeting said the minister had indicated that he would approach Treasury to facilitate a loan to pay off the domestic debt, which has become a major stumbling block to the steelmaker’s revival, including salaries for workers.
Workers have not been paid full salaries since 2011, except for a brief intervention by Essar in 2012 before the firm suspended paying salaries, citing lack of production.
Full implementation of the Essar deal has stalled over the issue of mineral rights, although government has recently announced the transaction will now be consummated after an agreement to let the Indian steel giant retain its 80 percent share in an iron mining joint venture.Advertisement