Govt fires Zisco staff, takes $700m debt

via Govt fires Zisco staff, takes $700m debt – New Zimbabwe 26/11/2015

GOVERNMENT will, 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, Finance Minister, Patrick Chinamasa has said.

The development confirms the collapse of the Redcliff steelmaker’s much-vaunted takeover by an Indian company despite vice president Emmerson Mnangagwa insisting in February this year that plans to restart the closed company were at an advanced stage.

Presenting the $4 billion 2016 national budget Thursday, Chinamasa said the country cannot realise meaningful economic recovery without a performing steel industry hence the need for measures to resuscitate the company.

“The country cannot make meaningful economic recovery without a robust steel industry and efforts to resuscitate Ziscosteel should be expedited,” Chinamasa said.

Chinamasa said the wage bill at the ailing steel company continued to balloon while most workers are engaged in other activities or are sitting at home scaring away investors in the process.

The company also owes workers more than $100 million in salary arrears.

He said government would take over the company’s liabilities but in the process dismiss all workers to enable a fresh start to the revival of the firm.

“Central to this is the need to free the Ziscosteel balance sheet, historical baggage liabilities including the accumulation of new obligations with regards to wages that arise on account of workers who are not working and are sitting at home or pursuing other engagements,” said Chinamasa.

He said government, like it did with the Reserve Bank of Zimbabwe, will take over the liabilities so that Ziscosteel becomes attractive to any investor who might be interested in taking over the organisation.

“Accordingly all contracts for Ziscosteel employees will be terminated on a three months’ notice with effect from 1 December this year and government through the ministry of industry and commerce will be updating honourable members on progress in engaging a new investor,” the finance minister said.

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.

To date the deal faced many obstacles and no investor has started work at the former iron and steel giant once considered Africa’s largest steel manufacturer before it collapsed in 2008.