Zim's unpaid debt dogs Ziscosteel deal

FAILURE by the Zimbabwean government to settle part of Zisco Steel's domestic debt which ballooned to over $200 million up from $72 million in 2010 might jeopardize a new deal with Essar Africa Holdings, which agreed to buy 54 percent of the State's 90 percent stake Zisco steel.
 
In a desperate attempt to expedite the finalization of the lucrative deal, government has mooted plans to liquidate part of Zisco's local debt to pave way for resuscitation of the Redcliff-based steel giant.
 
While Industry and Commerce Minister Mike Bimha downplayed the issue saying the solution was within reach, a source at Essar said the Indian firm was "hesitant" because of potential litigation threats arising from the debts.

The source said there was need for a "firm commitment" from the government that it will take over part of the local debt to allay the fears of potential lawsuits.

However, Minister Bimha said the Government was committed to meeting all its obligations to ensure the deal materialises.

Under the agreement struck in 2010, Essar was supposed to take over the company's foreign debt, which amounted to $300 million, and to share the domestic debt with government, which totalled $72 million at the time the deal was struck, based on the equity structure.

In May this year, Essar said it would invest $650 million over a two-year period to build a 500 000- tonne steel plant.

Essar Africa director Firdhose Coodvadia said the country's current steel consumption was 100 000 tonnes per annum, which would see the remainder being exported.

He said Essar would raise steel production to one million tonnes in the second phase and it also intended to build a 300-megawatt power plant.