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Lloyd Gumbo Senior Reporter
Government has ordered Hwange Colliery Company board and management to write a report on the circumstances surrounding the purchase of faulty mining equipment worth about $13 million from India.
Mines and Mining Development Deputy Minister Fred Moyo told Senators on Thursday that in the meantime they expected the replacement equipment to be airlifted in the shortest possible time.
He was responding to a question from Matabeleland North senator, Cde Thokozile Mathuthu during a questions without notice session in the Upper House.
“We confirmed that the equipment was warranted and guaranteed and the problems they are experiencing are technical,” he said.
“As a ministry we have asked for a technical report from management and it is only fair that we wait for that report. We want to give management and the board time to manage it and then we will present the report here.”
Deputy Minister Moyo said the fact that the Indian Firm-BEML insisted in a media statement that it supplied quality equipment would allow management to establish the correct facts on the ground.
Cde Mathuthu further asked if the suppliers had been awarded the job through a tender process.
Deputy Minister Moyo confirmed the Indian firm- BEML had been engaged through a tender system that the ministry was aware of, though the ministry was not involved in the technical or management of the adjudication process.
Hwange Colliery Company recently commissioned mining equipment worth $31 million including that which was bought from India and Belarus, though the equipment from India arrived with faults and technical problems that were seen soon after operation.
The equipment from India was funded by India Exim Bank, while that from BELAZ of Belarus came through a PTA Bank loan facility.
Management reportedly ignored a red flag raised by an engineer who was part of the delegation that went to India for due diligence checks.
The engineer reportedly pointed out that the machines delivered were different from those they had viewed in India.
The new open cast mining equipment was expected to increase the firm’s monthly output to about 500 000 tonnes from 300 000 tonnes, putting it on a solid path to profitability.
Government is the major shareholder in Hwange Colliery with 38 percent stake.
It fully supported Hwange Colliery’s initiatives and subsequently established lines of credit with PTA Bank and Exim Bank of India to finance other key economic development projects.
The $31,2 million used to buy the equipment is aggregated into Government debt.
For a long time Hwange Colliery’s balance sheet, which is heavily laden with debts and negative working capital, has been hampering turnaround efforts.
Cleaning of the balance sheet would enhance its ability to mobilise lines of credit from regional and international markets.
Hwange Colliery has been battling the legacy debt amounting to $160 million accumulated since 2006.
Online Reporter