via Airzim planes on Zisco creditors’ radar | The Herald July 17, 2014 by Lloyd Gumbo
Ziscosteel’s foreign creditors wanted to attach Air Zimbabwe planes to force Government to settle the steel-maker’s debt that has ballooned to more than US$300 million, parliamentarians heard last week.
Government assumed the Ziscosteel, now NewZim Steel, debt when it sold 54 percent shares in the steel-making company to an Indian firm, Essar Holdings, in 2011.
The investor took over the foreign debt with the two parties agreeing to share the domestic debt, which stood at US$72 million, but is now at more than US$200 million, based on 40 percent and 60 percent to Government and Essar, respectively.
Some of the foreign firms owed by Ziscosteel include KFW of Germany and Sino Sure of China, but it could not be established which one between them was after Air Zimbabwe planes.
Industry and Commerce Deputy Minister Chiratidzo Mabuwa said foreign creditors wanted to attach the national airline’s property because Government had a stake in NewZim Steel.
She was responding to Zanu-PF senator for Mashonaland Central, Cde Damian Mumvuri, who wanted to know what Government was doing to ensure resumption of operations at NewZim Steel.
“Foreign creditors wanted to attach Air Zimbabwe planes because Government has shares in NewZim Steel but we are happy that that has been sorted (out)because Essar has taken over the debt,” Deputy Minister Mabuwa said.
“It is the foreign debt that was now encroaching onto the other Zimbabwe assets that we celebrate today that has been solved and taken over by Essar.”
She said the investor was committed to seeing the deal succeed and was already engaging local creditors to settle the debts.
The local liabilities are related to employee benefits, pension fund and local authorities’ obligations.
At the signing of the agreement the local debt stood at US$72 million but soared to more than US$200 million because the inclusive Government did not pay anything towards liquidating the debt.
Deputy Minister Mabuwa said the NewZim Steel would in the meantime import steel billets from India and South Africa to ensure resumption of operations.
NewZim Steel employees have gone for more than three years without full pay as bickering over operational modalities stalled operations.
Government and Essar have since agreed to immediately implement interim measures that include injecting fresh funds into NewZim Steel to kickstart revival and offer relief to workers.
The parties will import feedstock in the next six months for sale through existing NewZim Steel distribution centres.
COMMENTS