GOVERNMENT has guaranteed loans worth a combined $1,14 billion availed to Sable Chemicals and Silo Food Industries Limited (Silo), the latest Government Gazette shows.
Silo is a subsidiary of the State-owned Grain Marketing Board (GMB), while Sable Chemicals is a privately-owned fertiliser manufacturer linked to businessman Shingi Mutasa.
The first notice relates to the government guaranteeing a $200 million NBS Bank loan to Silo Food Industries while another $550 million guaranteed for the same company was made with FBC Bank.
The two loans were for financing the procurement of raw materials for the production of mealie-meal and stockfeeds and the guarantee shall remain valid and in force until August 5, 2023.
A $390 million loan facility extended by ZB Bank to Sable Chemicals was also guaranteed.
“It is hereby notified, in terms of section 300(3) of the Constitution of Zimbabwe, read with section 20(1) of the Public Debt Management Act [Chapter 22:21], that the Finance and Economic Development ministry has issued a government guarantee under the terms and conditions specified below — (a) The guarantee is surety to NBS Bank that government will honour Silo Food Industries Limited’s obligations on the loan facility if it defaultson its contractual obligation. (b) The total amount covered by the guarantee is an amount not exceeding $200 million in addition to accrued interest,” part of the Gazette read.
On the Sable Chemicals facility, there is a partial guarantee which is surety to ZB Bank Limited that the government will honour 60% of the fertiliser manufacturer’s obligations on the loan facility if it defaults on its contractual obligation.
The sole purpose of the loan facility is to facilitate the importation of ammonia gas from South Africa.
The guarantee shall remain valid and in force until all amounts due underthe terms and conditions of the facility are paid.