HomeLocal NewsGovt moves to privatise parastatals

Govt moves to privatise parastatals

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The government is planning to privatise all its heavily-indebted parastatals in a bid to stop them from becoming a burden to the fiscus.

According to the State Enterprises Restructuring Agency (Sera)’s Restructuring Procedures Manual, the government would dispose of companies that were struggling under debt.

Part of the document reads: “In Zimbabwe, there are several SEPs (State Enterprises and Parastatals) that have large sums of debt accumulated on their balance sheets, and which SEPs have negative worth. The problem is the haemorrhaging of public funds, which the State cannot allow to continue. One objective, therefore, is to stem this continuing drain of the economy.”

State Enterprises and Parastatals minister Gorden Moyo confirmed the development yesterday, saying most of the parastatals were saddled by an inter-SEPs debt, which stood at $240 292 842,58 as at the end of last year.

“There is a need to analyse the SEPs debt position and follow it up with the cancellation of inter-SEPs debt,” he said, but declined to name some of the parastatals likely to go under the hammer.

“Some SEPs may have debts to public utilities or to other SEPs that can be cancelled. The incidence of this inter-SEPs or cross-over debt will need to be identified in the review of the SEPs targeted for privatisation.”

However, the agency said there was a challenge in disposing of the indebted SEPs as investors were reluctant to pour their money into struggling firms.

“These (SEPs) present difficult privatisation problems, as potential investors are usually very reluctant to even consider taking over a company with excessive debt on its balance sheet. That is, unless for their own corporate strategic reasons they really need to secure an equity foothold in an industry, or in the case of foreign investors to secure a foothold in the country,” the agency said.

The agency said privatisation-by-share would be considered for the heavily-indebted SEPs.

“This approach is ideal for SEPs that are heavily-indebted, but which would be commercially successful if they had a new capital injection,” the agency said.

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