THE $500 million Zisco Debt Assumption Bill now awaits Presidential assent after it sailed through third reading in the Upper House with legal documentation on the debt schedule being finalised.
A bill becomes an Act once it has been presented and passed in both Houses of Parliament and assented to and signed by the President. Government gazetted Zisco (Debt Assumption) Bill, H.B 2, 2018 in January so it could take over close to $500 million owed by the defunct Redcliff-based steel producer. Government decided to take over the debt in order to attract fresh investment to resuscitate the defunct company.
A Hong Kong-based steel manufacturer, R and F has signed a $1 billion investment deal with Government to take over operations at Redcliff.
Finance and Economic Development Minister, Patrick Chinamasa, said while legal fine tuning was yet to be concluded by experts, the Bill will go ahead. He was responding to a question in Parliament by Bulawayo South MP, Mr Eddie Cross, who queried whether Government intends to amend the schedule before the Bill is finally assented to by the President. His question was made with reference to an investor who has taken over the coke ovens and is assuming liability for the KFW debt.
“So, the Bill will go (for Presidential assent) as it is without the deduction of the KFW debt, which is around $163 million?” he asked.
“When we finalise the legal documents even when the Bill is an Act of Parliament, there is a provision in this Bill, which allows us to verify and to validate, then the schedule will be amended accordingly by the Debt Management Office.”
Some of the external creditors are Sinosure and Sumitomo Japan. A schedule of the Bill shows that Zisco owes $211,9 million in external loans, $6 million to external suppliers while $219,1 million is owed to domestic suppliers, utilities and statutory obligations and $57,7 million in domestic loans. Minister Chinamasa said the Zisco debt also includes outstanding financial obligations to external suppliers who supplied equipment to the Redcliff steel giant before it closed down.
Responding to allegations that individuals could have fraudulently benefited from Zisco, Minister Chinamasa said he had no evidence of anyone who fraudulently benefited from Zisco’s operations.
“As far as I am aware, the business was being run properly but the problem came when the hyperinflation came about and as a result the company could not continue operating,” he said.
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. The Parliamentary Portfolio Committee on Finance and Economic Development has recommended validation of the $500 million Zisco debt to authenticate the arrears before Government takes over the firm’s liability. It also recommended that there was need to ensure interest on debts was validated by interest bureau companies and auditors.
The Portfolio Committee, Minister Chinamasa said, had also said Government should provide clarity on what happens to minority shareholders after Zisco takeover.
Zisco ceased operations in 2008 rendering thousands of people jobless.
In 2011, an Indian steel producer, Essar Global signed a $750 million deal to take over the giant steel manufacturer but the deal collapsed as a result of political bickering in the then inclusive Government.