Govt prioritises Zisco revival
GOVERNMENT is on the verge of extending fresh support to Ziscosteel after the introduction in Parliament last week of a legal instrument for the State to assume the firm’s US$500 million debt.
The development is part of a process to attract investment and revive the company in line with President Emmerson Mnangagwa’s promise in January to resuscitate the company.
Zisco, whose employees numbered 5 000 at its peak, recently secured a deal for the sale of the company’s tangible and intangible assets to Tian Li Limited of Hong Kong.
The Asian company is a unit of R&F, which wants to inject about US$2 billion in the Kwekwe steel giant.
Zisco courted Essar Africa Holdings in 2011, but the deal collapsed due to bickering during the inclusive Government era.
The company also tried to roll out a US$400 million rehabilitate-operate-transfer deal with India’s Global Steel Holdings Limited but that also fell through. Things took a turn for the better last week when the Zimbabwe Iron and Steel Company (Debt Assumption) Bill was introduced in the National Assembly.
The Bill seeks to ensure investors start on a clean slate.
According to the proposed legislation, the debts covered are those incurred by Zisco before January 1, 2017.
“The Minister (of Finance and Economic Development) shall, on behalf of the State, assume responsibility for the discharge of the outstanding obligations of Zisco with respect to its prior debts; and such other obligations as he or she may consider expedient with the prior debts of Zisco,” reads part of the Bill.
“The prior debts may be liquidated through the issuance of Government-backed debt instruments (and) no action or proceeding shall be commenced or continued against Zisco in respect of a prior debt assumed by the minister on behalf of the State, or any other obligation or claim in connection therewith or arising therefrom.”
Zisco owes around US$212 million to three external financiers — KFW of Germany (U$164 million), Sinosure of China (US$47 million) and Sumitomo of Japan (US$700 000). It also owes US$219 million locally, including salaries (US$94 million), taxes (US$15 million), City of Kwekwe (US$16 million) and Municipality of Redcliff (US$11 million).