Red tape on Zisco worrying

revival of Ziscosteel are disturbing.
It has emerged that although Essar and the Government signed the Zisco deal in February, Essar was yet to obtain the assurances it requested.
Renaissance Capital were the lead advisors to the multimillion-dollar investment deal, which came after several failed attempts to revive Zisco.
Government promised to ensure Essar has access to water and consistent supply of power from Hwange Colliery Limited when it sold its 54 percent in the dormant former State-controlled enterprise.
It also gave assurances the Mauritian- registered Indian firm would get fiscal concessions and get concessions for coal mining claims.
The requests on water and power were made in the wake of supply inconsistencies characterising delivery of these services in Zimbabwe.
The country is facing a crippling shortage of power due to ageing and inadequate generating infrastructure.
Infrastructure-related challenges have also presented serious problems for the adequate supply of water.
Essar also wanted fiscal concessions most investors are expected for investments of the magnitude Essar will make in Zisco.
The firm also required coal-mining claims as it wanted to run Munyati Power Station in order to have a power plant dedicated to the steel firm.
Sources said the slow pace at which Government departments and institutions with control over the key enablers were moving was reportedly worrying Essar.
Industry and Commerce Deputy Minister Mike Bimha yesterday said his ministry had no control over the key enablers that remain, but said Essar was engaging the relevant authorities.
“There were no preconditions because we were able to engage and sign the deal. It was an expression to say the arrangement for access key enablers must be attended,” said the deputy minister.
Admittedly, the enablers were central to the successful running of any business and expressed hope the respective ministries and institutions concerned would quickly buy in to enable the revival of Zisco.
While the deputy minister said the delays on the guarantees would not affect Essar’s plans, sources said its plans for Zisco are complete and it is now awaiting the guarantees to start working on the plant.
Sources told Herald Business that Essar Africa hoped to obtain the Government guarantees within the next four weeks to roll out its plans.
But it is worrying when certain Government departments fail to appreciate the urgency of the need for the immediate revival of Ziscosteel.
Potentially Africa’s largest integrated steelmaker, Ziscosteel’s revival would have a huge impact on the reindustrialisation of Zimbabwe.
The record US$750 million investment would save the country millions of dollars being used to import steel from neighbouring South Africa.
Continuing to import steel means the country is exporting jobs it easily now has capacity to retain staff at a time unemployment is at its peak.
Before falling into the financial quagmire Ziscosteel employed over 4 000 workers and considering its potential impact on downstream industries the effect in terms of employment would be bigger.
The former steelmaking giant has potential to produce more than the local demand and export, which would result in substantial inflows of hard currency.
In addition, the firm consumed huge volumes of gaseous oxygen produced by other industries such as Sable Chemicals, which means the revival of Zisco has huge spin-offs for both the economy and the country.
The firm has not operated since 2008 and revival, especially by a reputable and experienced investor such as Essar Africa, should be prioritised.
This becomes all the more important considering requirements for Ziscosteel would be too ominous for many investors to contend with.
After taking over Ziscosteel Essar committed itself to assume Government’s external liabilities that stand at more than US$240 million at a time the State had no financial resources to clear long overdue debts. Essar also pledged to clear domestic liabilities including salary arrears totalling US$22 million, which is well beyond Treasury’s purse.
That President Mugabe and other principals in the Government approved Essar as the rightful investor for Zisco speaks volumes on the calibre of their preferred investor and the need to revive Zisco.