A Chinese bank has introduced stringent insurance demands which may derail the $145 million loan to the City of Harare for the refurbishment of water sources in the capital, NewsDay can reveal.
The Export and Import Bank of China has stalled on its earlier promise to release the loan demanding heavy cover premiums over and above normal loan facilities.
Harare Mayor Muchadeyi Masunda said he believed the new position by the Chinese had been caused by reckless statements by politicians that were scaring investors away including even Zimbabwes so-called all-weather friends.
It is imperative for all of us, particularly politicians right across the political divide, in leadership positions, to refrain from making utterances that frighten international lenders who then end up loading normal loan facilities with onerous insurance cover premiums, Masunda said.
I am keeping my fingers crossed that this hurdle will be overcome within the next week so that we may start accessing the funds as our Harare water team is ready to start work on the long overdue rehabilitation of Firle and Crowborough sewage reticulation plants.
Masunda said he discussed the matter at length last week with Xin Shunkang, the outgoing Chinese Ambassador to Zimbabwe when he came to bid him farewell.
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He said the Chinese bank was insisting on adequate insurance cover being provided by Harare in conjunction with the government of Zimbabwe in order to secure the repayment of the loan.
Even our all-weather friends are understandably jittery in their business dealings with us largely because of the perceived risks which are peculiar to our beloved and yet beleaguered Zimbabwe, Masunda said.
The irony of it all is that the city met the stringent criteria of the lending institution following a thorough due diligence exercise.
We have assets which are relatively unencumbered and whose intrinsic value is substantially more than the quantum of the loan, he said.
The loan facility is meant to increase water treatment capacity by 140 megalitres from the current 600 megalitres a day and would come in handy in addressing the perennial water shortages in the city.
Harare and its surrounding towns of Chitungwiza, Ruwa, Epworth and Norton require 1 200 megalitres daily.