Chinamasa looks at Zisco debt with rose tinted glasses

FINANCE and Economic Development minister Patrick Chinamasa says taking over the Zimbabwe Iron and Steel Company Limited’s (Zisco’s) debt of $494,8 million will not add to the government’s debt.

BY TATIRA ZWINOIRA

In a second reading of the Zimbabwe Iron and Steel Company (Debt Assumption) Bill during a late sitting of Parliament on Wednesday evening, Chinamasa explained measures to stop Zisco’s debt weighing government down.

“It has been agreed with the Ministry of Industry, Commerce and Enterprise Development that in the long run, this debt assumption will not translate into an increase in government debt because, one, the current project structure is based on Zisco being compartmentalised into three main components,” he explained.

“The first part involves the new Chinese investor, who will invest in a new plant and equipment and operate the rest of the steel plant.

“The new plant, in addition to long products, will produce flat products and special steel.

“It is believed that this investment will exceed $1 billion and has tremendous potential benefits to the economy.

“The second part encompasses the coke oven batteries ancillary plant and equipment, which will be used to produce coke for exports by a local
investor.

“The proceeds from coke export will be used to pay off the Germany KFW debt amounting to $174 million.”

Chinamasa said this arrangement had already been concluded and when the Bill goes to the committee stage, he will ask for an amendment of the schedule of debts to reduce it by $170 million.

“Lastly, a separate company will be incorporated with ownership of mining claims and rights and any investor will equip and operate the mines for a fee payable to the new company,” he said.


“This fee will be used to pay the Chinese and local debts, which amount to $284 million.”

In spite of a few false starts, the government hopes it can resuscitate Zisco, but assuming its debt means public debt, already over $11 billion, could soar.

The government is pinning its hopes on resuscitating Zisco by restructuring its debt and cleaning its balance sheet, a condition precedent to the operationalisation of an agreement between Zimbabwe and a Chinese investor.

The third clause of the proposed Bill establishes the extent of the liabilities to be assumed by the government.

The debt Zisco accrued prior to January 1, 2017 will be taken over by the government and thereafter, Zisco will be responsible for its own operational costs and liabilities.

Legislator David Chapfika said he would submit a report from the Portfolio Committee on the Zisco Debt Assumption Bill today.

Loading...

6 Comments

  1. A forensic audit of what constitute the DEBT must be conducted and made public first before taxpayers are burdened. Chances are the DEBT was accrued due to corruption plunder and mismanagement a known zanupf modus operandi. As a matter of fact all those so called ‘mega deals’ should be publicly scrutinised so heritage for future generations is not mortigaged to so called investors especially Chinese.

  2. The Chinese are now being offered a better deal that the Indians and other previous prospective bidders.

    1. Prosperity Mzila

      This is a new dispensation Government that is seriously open for business. One cannot take the the faults of the previous administration and stick them to the new one. Entry of the new dispensation was also necessitated by the bottlenecks towards business investments by the old Government. Corruption having been part of the delay to ease the way of doing business in the country. President E.D has said Zimbabwe under this new dispensation has no tolerance to corruption. It is unfortunate that the Indians and other prospective bidders came in at the wrong time and felt discouraged, they should have returned the minute they heard the President say “Zimbabwe is Open for Business” because surely it is open and Investments are being necessitated without a need for kickbacks.

      1. Zimbabwe is open for buyers, is what is happening on the ground

  3. Chinamsa and the military junta are un-elected yet they are making plans for the future! Khupe will be President after elections according to reliable sources.

  4. Zimbabwe will Never be a colony again …

Leave a Reply

Your email address will not be published.