Business / Companies
Zisco's $500m debt queried
30 Mar 2018 at 08:37hrs | Views
GOVERNMENT should first carry out an audit to determine how the now defunct parastatal, Zisco, accrued arrears before taking over the $500 million debt, stakeholders in Bulawayo said yesterday.
Speaking during a public hearing on the Zisco Debt Assumption Bill conducted in the city by the Parliamentary Portfolio Committee on Finance and Economic Development, participants demanded transparency and accountability on how Zisco reached such debt levels.
Assumption of the Zisco Debt is part of initiatives aimed at attracting potential investment following a keen interest shown by the Hong Kong-based steel producer R and F, which last year signed a $1 billion deal to revive operations at the Redcliff steel plant.
In January, Government announced that it had gazetted Zisco (Debt Assumption) Bill, H.B 2, 2018 to take over close to $500 million owed by the firm. The defunct parastatal owes $494 817 324 to domestic and foreign creditors. The Portfolio Committee on Finance and Economic Development chaired by Mr
David Chapfika, who is also the legislator for Mutoko South, is conducting marathon public consultations on the Zisco debt in Harare, Kwekwe, Gweru and Bulawayo.
"We recommend that before Government assumes the Zisco debt, we would want to see a debt audit being conducted to determine how the debt was accrued.
"We also want, instead of the Government assuming the company's debt, Zisco should rather liquidate its non-core assets to settle the arrears," said the Zimbabwe Coalition on Debt and Development representative, Ms Florence Ndlovu.
"And also the Government must strengthen its finance management systems to enhance transparency and accountability in the management and utilisation of public resources."
National Employment Council for the Engineering, Iron and Steel Industry designated agent Mr Tinashe Manyangadze said: "As the National Employment Council for the Engineering, Iron and Steel Industry, we see the Bill does not specify what are payroll liabilities and when we followed up with Zisco we are told that the NEC contributions were included in the payroll liabilities but it is not clear like any other debtors who are in the summary of the creditors".
He said they have proof that Zisco owes the NEC in excess of $2 million adding that they wanted that to be made clear in the Bill.
A participant stresses a point during a Portfolio Committee on Finance and Economic Development public hearing at a Bulawayo hotel yesterday. - (Picture by Nkosizile Ndlovu)
A participant stresses a point during a Portfolio Committee on Finance and Economic Development public hearing at a Bulawayo hotel yesterday. - (Picture by Nkosizile Ndlovu)
"Also we are made to understand that Zisco has got subsidiary companies such as Lancashire Steel, we would like the Bill to be very explicit in defining what the Zisco debt indicating the subsidiary companies' debts so that the creditors owed by the subsidiary entities know that they are also covered in the Zisco Debt Assumption Bill," added Mr Manyangadze.
A schedule of the Bill indicates Zisco owes $211 912 400 in external loans, $6 095 620 to external suppliers, while $219 113 219 is owed to domestic suppliers, utilities and statutory obligations and $57 696 085 in domestic loans. Clause 3 of the Bill indicates that the debts consist of liabilities incurred by Zisco before January 1, 2017, those validated and reconciled by the Debt Management Office and liabilities arising out of a Government guarantee or undertaking.
Participants also recommended that the Government should take full responsibility for paying outstanding salaries.
"In terms of our existing laws, it is an obligation to pay salaries and if we now pass another law on payment of salaries that would be contrary to the existing law or the Constitution and so by way of adopting that in the new Bill, we don't think that would be very much welcoming in terms of the rights of the employees," said Mr Manyangadze.
Some suggested Government should consider paying former Zisco employees outstanding salaries regardless of the outcome of the Bill. The committee advised that written submissions and correspondence were still welcome and should be submitted to the Clerk of Parliament. Mr Chapfika told the gathering that it was a constitutional requirement that such engagements be conducted before Government takes over a debt of a public entity because it was tax payers' money that would be used to offset the arrears.
"Government taxes you and me hence that's why it is a constitutional requirement to consult you because this money, you are the shareholders as you contribute money to the fiscus. We are here to gather views either for or against the Zisco debt takeover by Government," he said.
Zisco ceased operations at the height of economic challenges the country was reeling under in 2008 resulting in over 5 000 people losing jobs. In 2011, an Indian company, Essar Global signed a deal with Government to revive the steel giant in a transaction valued at $750 million. The deal collapsed due to a number of reasons, including political bickering in the then inclusive Government.
Speaking during a public hearing on the Zisco Debt Assumption Bill conducted in the city by the Parliamentary Portfolio Committee on Finance and Economic Development, participants demanded transparency and accountability on how Zisco reached such debt levels.
Assumption of the Zisco Debt is part of initiatives aimed at attracting potential investment following a keen interest shown by the Hong Kong-based steel producer R and F, which last year signed a $1 billion deal to revive operations at the Redcliff steel plant.
In January, Government announced that it had gazetted Zisco (Debt Assumption) Bill, H.B 2, 2018 to take over close to $500 million owed by the firm. The defunct parastatal owes $494 817 324 to domestic and foreign creditors. The Portfolio Committee on Finance and Economic Development chaired by Mr
David Chapfika, who is also the legislator for Mutoko South, is conducting marathon public consultations on the Zisco debt in Harare, Kwekwe, Gweru and Bulawayo.
"We recommend that before Government assumes the Zisco debt, we would want to see a debt audit being conducted to determine how the debt was accrued.
"We also want, instead of the Government assuming the company's debt, Zisco should rather liquidate its non-core assets to settle the arrears," said the Zimbabwe Coalition on Debt and Development representative, Ms Florence Ndlovu.
"And also the Government must strengthen its finance management systems to enhance transparency and accountability in the management and utilisation of public resources."
National Employment Council for the Engineering, Iron and Steel Industry designated agent Mr Tinashe Manyangadze said: "As the National Employment Council for the Engineering, Iron and Steel Industry, we see the Bill does not specify what are payroll liabilities and when we followed up with Zisco we are told that the NEC contributions were included in the payroll liabilities but it is not clear like any other debtors who are in the summary of the creditors".
He said they have proof that Zisco owes the NEC in excess of $2 million adding that they wanted that to be made clear in the Bill.
A participant stresses a point during a Portfolio Committee on Finance and Economic Development public hearing at a Bulawayo hotel yesterday. - (Picture by Nkosizile Ndlovu)
A participant stresses a point during a Portfolio Committee on Finance and Economic Development public hearing at a Bulawayo hotel yesterday. - (Picture by Nkosizile Ndlovu)
"Also we are made to understand that Zisco has got subsidiary companies such as Lancashire Steel, we would like the Bill to be very explicit in defining what the Zisco debt indicating the subsidiary companies' debts so that the creditors owed by the subsidiary entities know that they are also covered in the Zisco Debt Assumption Bill," added Mr Manyangadze.
A schedule of the Bill indicates Zisco owes $211 912 400 in external loans, $6 095 620 to external suppliers, while $219 113 219 is owed to domestic suppliers, utilities and statutory obligations and $57 696 085 in domestic loans. Clause 3 of the Bill indicates that the debts consist of liabilities incurred by Zisco before January 1, 2017, those validated and reconciled by the Debt Management Office and liabilities arising out of a Government guarantee or undertaking.
Participants also recommended that the Government should take full responsibility for paying outstanding salaries.
"In terms of our existing laws, it is an obligation to pay salaries and if we now pass another law on payment of salaries that would be contrary to the existing law or the Constitution and so by way of adopting that in the new Bill, we don't think that would be very much welcoming in terms of the rights of the employees," said Mr Manyangadze.
Some suggested Government should consider paying former Zisco employees outstanding salaries regardless of the outcome of the Bill. The committee advised that written submissions and correspondence were still welcome and should be submitted to the Clerk of Parliament. Mr Chapfika told the gathering that it was a constitutional requirement that such engagements be conducted before Government takes over a debt of a public entity because it was tax payers' money that would be used to offset the arrears.
"Government taxes you and me hence that's why it is a constitutional requirement to consult you because this money, you are the shareholders as you contribute money to the fiscus. We are here to gather views either for or against the Zisco debt takeover by Government," he said.
Zisco ceased operations at the height of economic challenges the country was reeling under in 2008 resulting in over 5 000 people losing jobs. In 2011, an Indian company, Essar Global signed a deal with Government to revive the steel giant in a transaction valued at $750 million. The deal collapsed due to a number of reasons, including political bickering in the then inclusive Government.
Source - online
