The deal between Indian firm Essar Africa Holdings and Zimbabwe Iron and Steel Company is above aboard although there was some outstanding agreements yet to be signed between the two parties, a Cabinet minister said yesterday.
Industry and Commerce minister Weshman Ncube said the Essar still controlled 54% of Ziscosteel as per the signed agreement in March this year.
He said there had not been any agreement regarding tax concession for the company as suggested by other media reports yesterday.
The reports said Ncube had granted tax concessions which include zero income tax for the first 10 years, 10% for the second 10 years and 15% for year 21 to 25.
On withholding tax, it is alleged that Essar had been granted zero rate on local steel sales, zero VAT on inputs or services, zero VAT or duties on all imports, zero customs duty on imports including personal effects for the first 10 years and zero duty on all consumables for the first 15 years was not true.
“There was no agreement regarding tax concessions. The memorandum of understanding is not yet agreed on and the Ministry of Finance is yet to sign the agreement,” said Ncube.
Ncube however said any tax concessions that would be agreed on would be for the benefit of the underperforming Zisco plant.
He said Essar still controls 54% in the company through the purchase of 60% of the government’s 89% equity adding there had not be further adjustments on the initial deal signed in March.
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He said the Essar-Zisco deal was aimed at turning around fortunes of the steel-making firm and the development of the country’s economy.
“Many people are finding things to say because they are used to getting money in their pockets and when things are now done properly and not allowing any linkages for the benefit of everyone, they find someone to blame,” said Ncube.
“Zisco has not been operational for the last three years and thousands of workers have not been paid for many years. Either way the deal is in favour of both government and Essar.”
Under the deal Essar is expected to settle Zisco’s debt estimated at over $240 million and inject fresh capital into the company.
President Robert Mugabe is tomorrow expected to unveil a plaque marking the official rehabilitation of the dormant giant steel-making firm.
