Six financially troubled parastatals including Air Zimbabwe (Airzim) and the National Railways of Zimbabwe (NRZ) continue to eat into the fiscus after they posted losses of over $40 million for the period ending June 30, 2010.
Airzim recorded a $14,6 million loss, Noczim $11,9 million, Grain Marketing Board $4,5 million, NRZ $9,6 million, Cold Storage Company $3 million and Agribank $2,8 million.
Presenting the 2011 National Budget in Parliament yesterday, Finance minister Tendai Biti said staff costs at these companies were well above revenues, resulting in huge losses.
“Ironically these losses end up being assumed by the fiscus,” said Biti.
“In order to limit exposure to parastatal losses and improve their performance, government is carrying out a public enterprises reform programme, which entails either restructuring, commercialisation or privatisation of respective entities on a case-bycase basis.”
Biti said parastatals continued to face challenges of capitalisation, debt management and human resources.
The Finance minister said consequently, government had launched the first phase of the reform programme, targeting 10 major enterprises.
He said in the restructuring exercise, government would take advantage of the Zimbabwe Iron and Steel Company (Zisco) restructuring model under which about two-thirds of the shareholding was successfully disposed to Indian company Essar Group, which in turn assumed Zisco’s debt.
The steel maker has two major debts, one to a Chinese bank that was due and has been renegotiated to be paid by end of 2011.
The other debt amounts to $240 million owed to a German bank.
Biti said the model adopted in disposing the giant steel company was transparent and reflective of a win-win situation that should be used as a reference guide and be replicated.
He said government was finalising the Corporate Governance Manual for public enterprises that seeks to guide the operations of parastatals going forward.