Put your house in order, govt told

via Put your house in order, govt told – DailyNews Live • 12 December 2015

HARARE – The Zimbabwean government must put its house in order before securing investors for struggling iron ore giant Ziscosteel, economic and political analysts have said.

This comes after Finance minister Patrick Chinamasa recently admitted that the $750 million Essar-Ziscosteel deal had collapsed and government was now searching for new investors.

Speaker of Parliament Jacob Mudenda said government should vet investors more diligently before committing national resources as the deal had short-changed Zimbabweans.

“We applaud the cancellation of the Zisco-Essar deal, now we hope a new and credible investor will be found soon for the sake of progress,” he said at a post-budget seminar this week.

Government and Essar struck a $750 million deal in 2011 with the investor agreeing to take over Ziscosteel’s foreign debt, which amounted to $300 million, and to share the domestic debt with government, which totalled $72 million at the time.

However, since then, the operations at the steel maker never took off due to policy inconsistency and squabbles in government.

Local analysts had also argued that the terms of the deal gave Essar authority to mine, process and export ore for an estimated at 20 years, which was not commensurate with their investment.

In his 2016 National Budget statement, Chinamasa said government was going to — with effect from December 1 this year — terminate all contracts for Ziscosteel workers on three months’ notice and absorb its wage liabilities in a bid to attract investors to resuscitate the company.

He added that the country could not realise meaningful economic recovery without a performing steel industry hence the need for measures to resuscitate the company.

The development confirmed the collapse of the Redcliff steelmaker’s much-vaunted takeover by the Indian investor despite Industry minister Mike Bimha’s insistence throughout the year that the deal was still on.

The Speaker of Parliament said a more stringent vetting process had to be put in place when it came to bigger investors to avoid the Zisco-Essar “mishap”.

“What this simply means is when huge projects are at stake, the vetting has to be more stringent and commitment must be shown by the investor to avoid unceremonious pull-outs,” he said.

Zimbabwe Economic Policy and Research Unit (Zeparu) executive director Gibson Chigumira also told delegates at the same event that government had taken the right path in finally clarifying the position.

“This will open doors for new investors and it was long overdue, we know the industry has come up with a strategy for this company. Going forward, effort should be put on such strategic companies to ensure that the country’s export figures are boosted,” he said.