Govt loans to clear Sable debt

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KWEKWE — The government has directed Finance minister Tendai Biti to convert part of its loans advanced to power utility Zesa to meet State’s obligations to subsidise the ballooning Sable Chemicals power bill, a Cabinet minister has said.

A standoff between government and Zesa over the payment of the $30 million subsidy for the ammonium nitrate (AN) fertiliser manufacturer threatens the viability of the firm after its power was switched off in January.

Sable Chemicals is the country’s sole AN fertiliser manufacturer.

Industry minister Welshman Ncube said the money owed to Zesa was supposed to be paid by government as part of a subsidy to its electricity tariffs.

Ncube said since the cash-strapped inclusive government could not continue to dole out money to Zesa they had directed a loan transfer to meet the bills.

“We agreed during a Cabinet meeting last Tuesday that Zesa cannot keep getting money from the government. They have received over $100 million in loans from government, therefore, what we will do is part of that loan will be converted into paying the outstanding $30 million to settle the debt,” said Ncube said at the weekend.

Zesa has pulled the plug on Sable Chemicals to force it to pay its bill. According to the minister Zesa has been refusing to restore power supplies until they get a letter of guarantee from government.

“They have refused to restore supplies until Finance minister Tendai Biti has written a letter confirming the transfer of the loans into payments of the Sable Chemicals debt . . . the Minister of Energy (Elton Magoma) has also been asked to put his house in order so that the plant is back on line,” said Ncube.

The government owns 36% of Sable Chemicals, 51% is owned by TA Holdings and the remainder by other minority shareholders. The world’s biggest electrolysis plant consumes an estimated 80megawatts/hour of power.

Sable Chemicals buys electricity at a government subisdised rate of 3c per unit instead of the commercial rate of 9c to run the power-intensive plant, while government is supposed to pay Zesa the difference.

Buying power at any rate above 3c would result in huge losses and the company would be unable to sustain operations without effecting a massive hike on the price of fertliser.