Cabinet approves $1bn debt takeover:
CABINET has approved the assumption of over $1 billion worth of debts that have been accumulated by some critical State Enterprises including Air Zimbabwe and Zisco Steel, as part of accelerated efforts to make them attractive to potential suitors.
In his annual budget review and outlook for 2017 statement in Parliament yesterday, Finance and Economic Development Minister Patrick Chinamasa said the assumption of parastatal debts would continue on a case by case basis.
“Cabinet has also approved debt assumption of some public enterprises with a view to making their balance sheet attractive to potential investors.
“These include the National Railways of Zimbabwe (NRZ), Air Zimbabwe, Civil Aviation Authority of Zimbabwe (Caaz), and recently for Zisco Steel.
“This strategy will be pursued on a case by case basis as a way of attracting foreign investment into these entities,” said Minister Chinamasa.
Government is determined to turnaround the fortunes of parastatals, especially those that have immediate impact to economic turnaround.
However, the hunt for investors and/ or technical partners for some of the targeted parastatals has continued at a snail’s pace given that the companies are saddled with humongous debts amounting to over $1 billion.
Caaz is in debt to the tune of $240 million while Ziscosteel is burdened by a $380 million debt.
NRZ, which has begun the adjudication process to select the winning bidder from the six potential investors lined up, is groaning under the weight of a $200 million debt.
Government says about $400 million is required for the recapitalisation of NRZ, which is central to economic transformation since it helps reduce the cost transportation by about 40 percent compared to road transport.
On the other hand, Air Zimbabwe is reeling under a $334 million debt and Cabinet has already directed Transport and Infrastructure Development Minister Dr Jorum Gumbo to find a technical partner for Air Zimbabwe to ensure its revival.
However, concerns over its huge debt have stalled the negotiations process.
Government is understood to be locked in negotiations for the acquisition of four new aircrafts to beef up the current stock. In 1980, Air Zimbabwe had a fleet of 18 planes.
Dr Gumbo recently confirmed that they are working on “refreshing” all aspects of Air Zimbabwe’s operations, in preparation for the anticipated takeoff.
Meanwhile, Minister Chinamasa also said Government has made a conscious decision to resuscitate CAPS Holdings and Cottco, through warehousing their legacy debts under the Zimbabwe Asset Management Company (Zamco), before Government fully takes up its equity.
Zamco took over $56 million of Cottco’s debt while CAPS is understood to be owing CBZ and FBC up to $4 million.
CAPS requires about $6 million to recapitalise operations.