HomeLocal News‘Essar deal backtrack wrong signal’

‘Essar deal backtrack wrong signal’


The Essar Holdings’ $750 million deal to revive Ziscosteel is in limbo as a result of divisions between ministries over ore claims to be surrendered to the Indian company and compliance with the 51% indigenisation policy.

NewsDay (ND) editor Constantine Chimakure last week met in the capital with India ambassador to Zimbabwe, Shri JK Tripathi (JKT), to discuss the Essar deal, political developments in Zimbabwe and other issues. Below are excerpts.

ND: One of the major investments in Zimbabwe in the past 10 years has been the coming in of Essar Holdings to revive Zisco. What is your position over the current impasse between the company and our government?

JKT: Coming to the current impasse between Essar Holdings and the government of Zimbabwe over the operation of Zisco and allotment of mining concessions to the Indian company, I would not like to go into details of what went wrong and where, if at all there were any problems. However, I would like to flag the point that on the grounds of principle, this impasse is sending wrong signals to the international business community.

After two bidding processes, the company was selected by the Zimbabwean government and, I understand, the Cabinet of Zimbabwe in its full meeting approved the granting of contract to Essar Holdings. Subsequently, the joint venture was inaugurated by none other than the Head of State, His Excellency President Robert Gabriel Mugabe, with the entire Cabinet and other high ranking officials present.

Therefore, to say now that certain ministries were not involved in the decision-making seems very strange to me. Nobody has ever disclosed that as part of the contract, Essar Holdings was to assume foreign debts of more than $100 million (owed by its defunct predecessor) and employees’ salary arrears.

Besides this, Essar Holdings has also committed to develop a part of Zimbabwe’s railways, improve power generation in the area and education and health system in the hinterland of their operations.

ND: What is the impact of the Essar wrangle to investments into Zimbabwe, especially foreign direct investments?

JKT: A number of Indian investors and, I believe many foreign investors, are also eagerly waiting for the outcome of this impasse. This is a litmus test of credibility of the business environment in Zimbabwe and if this type of impasses can take place in the contracts signed by the sovereign government of Zimbabwe with a company, then one can imagine the fate of contracts signed between smaller private parties.

I am not in favour of this or that private company, but what I want to emphasise is that once a sovereign government has contracted a company, backtracking from it will send negative signals in the international investment circles. The (Essar) problem should be ironed out as soon as possible.

ND: What is your take on Zimbabwe’s indigenisation drive?

JKT: As regards indigenisation, it is an internal matter not fit for a comment from me. However, I would like to say that the governments of most of the developing countries have indigenisation measures of various degrees put in place, but what is needed here is a clear cut policy on the matter to ensure that foreign investors are not taken by surprise. I hope the government of Zimbabwe is seized with the matter and will sort it out as soon as possible.

ND: Is it correct that India or Indian companies want to invest in our coal industry, especially at Hwange?

JKT: I have no information about the intentions of Indian companies to invest in Hwange at present. However, about four years back, Coal India Ltd, an Indian parastatal, was interested in investing in Hwange, but due to hyperinflation at that time they did not pursue the matter further.

ND: What is India, as the world’s largest democracy and fast growing economy, doing in Zimbabwe on the socio and economic development front?

JKT: As the world’s largest democracy and fast growing economy, India is assisting Zimbabwe in many areas, mainly capacity building and economic empowerment. We have almost completed an assistance programme for $5 million to develop the SME sector in Zimbabwe.

This programme includes training of Zimbabwean professionals in India as well as on-the-job training in Zimbabwe by professionals from India.

Under this programme, we have also pledged to establish 17 centres in Zimbabwe for the development of SMEs. Five of these centres have already been established at HIT (Harare Institute of Technology), Bulawayo Polytechnic, Bindura, Mutare and Lupane. Twelve more are in the process of being set up.

Besides this, we are also in the process of setting up an SMEs incubation centre. As regards capacity development in other areas, India is offering more than 200 scholarships annually to Zimbabwean professionals and semi-professionals to get training in more than 60 Indian institutions for a period ranging from two weeks to one year.

The entire cost of such training, including the airfare, accommodation and out of pocket allowance, is being borne by the government of India.

In addition to this, India is offering 18 scholarships every year to Zimbabwean students to study in Indian institutions and universities for full time graduate, post-graduate and doctoral degrees.

This also includes airfare, tuition fees, accommodation and out of pocket allowance. In order to provide better and speedier education, the University of Zimbabwe has been connected online with nine prestigious institutions of higher education in India which are conducting online classes for students at the University of Zimbabwe leading to under-graduate and post-graduate degrees in Business Administration, ICT and Finance.

India is also in the process of connecting Parirenyatwa Hospital to 12 super-specialty hospitals of India for online consultations and online training for doctors and nurses for five years.

This programme is likely to be launched in the very near future. We are also in the process of installing computers in high density areas of three cities, Harare, Bulawayo and Mutare, which will be powered by solar panels and connected to information highway to enable the disadvantaged persons and children in these areas to surf the internet, thus enriching their knowledge.

This programme is also likely to be launched very soon. India has also decided to set up two institutes in Zimbabwe: a Food Testing Laboratory and a Rural Technology Park. The site for the Food Testing Laboratory has been selected in collaboration with the government of Zimbabwe and the next process is on. A team from India is likely to visit soon to select a site for the Rural Technology Park.

Very recently, we selected 25 women basket weavers from all over Zimbabwe in coordination with the Ministry of SMEs and taken them to the premier Indian institution, National Institute of Design, for 15 days at the cost of the government of India to train them to enhance their skills for value addition in their profession.

These satisfied women basket weavers who came back recently from their successful training will, in turn, train other Zimbabwean basket weavers for value addition of their products. We are also considering extending a line of credit to Zimbabwe for various developmental projects.

ND: What is the view of India on political developments in Zimbabwe? Do you think Zimbabwe is ready for elections?

JKT: I would not like to make any in depth comment on the political developments in Zimbabwe because it is purely an internal matter and hence not my area.
However, I would like to highlight that irrespective of whatever political direction the country takes, it should be non-violent and should aim for the upliftment of the entire population of the country.

Again, it is not pertinent for me to make any comments about Zimbabwe’s preparedness for the elections because it is an internal matter depending on various internal factors which the politicians of the country should decide mutually.

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