Harare – The Government has defended placement of Hwange Colliery Company under reconstruction, saying the company had a huge debt which it could not clear coupled with gross mismanagement.
Government, which has a 52 percent stake in the company, announced the reconstruction exercise in an extraordinary government gazette published on 29 October 2018.
Presenting oral evidence before the Parliamentary Portfolio Committee on Mines and Mining Development, the Minister of Justice, Legal and Parliamentary Affairs, Cde Ziyambi Ziyambi said that he was satisfied that the loss making entity did not have the capacity to pay back its $150 million debt to government and was grossly mismanaged.
“Hwange Colliery Company owes the government more than $150 million and it was imperative that the company be placed under judicial management because all indications were that the firm, with the management it had in place, did not have the capacity to turn around its fortunes.
“In my view, I applied my mind and I believe that was the best root to go. But the law has checks and balances, I put Hwange under reconstruction and am obliged to put what I have before a judge so that he/she can make a determination on those points. And if the judge believes that what we did is wrong, we will stand guided and the Scheme of Arrangement will continue with its work,” he said.
Quizzed on whether the Ministry of Mines gave the Justice Minister the necessary documents for him to come up with the decision, Deputy Minister of Mines and Mineral Development, Polite Kambamura under oath insisted that the former was furnished with all the necessary information to come up with the decision of placing the miner under reconstruction.
Minister Ziyambi told the committee chaired by Norton MP Themba Mliswa that wanted to know the rationale of placing Hwange under reconstruction that in terms of the Reconstruction of State Indebted Companies and Insolvency Act the decision was subject to a review by the High Court within 30 days and any affected stakeholder would get an opportunity to make representations before a judge.
When asked why he was swift with his decision of putting Hwange under reconstruction yet there was a court order which had set up a system to Hwange and put things in order, Ziyambi said there was unreasonable doubt that the company was underperforming and there was gross mismanagement and denied knowledge that the Scheme of Arrangement was proceeding well.
The Chairperson of the Scheme of Arrangement, Andrew Lawson, on two occasions told the committee that the scheme was moving well until he was disturbed by the issuance of the Reconstruction order.
According to other parliamentarians the move by Ziyambi to put Hwange under reconstruction destabilized operations and it has so far been delisted on the Zimbabwe Stock Exchange, Johannesburg Stock Exchange and the London Stock Exchange which is not in tandem with the country’s mantra of opening up the country for business and attract foreign direct investments, yet some workers testified before the committee that operations were moving smoothly under the Scheme of Arrangement.
However, the Justice Minister rubbished the sentiments arguing that even the Portfolio Committee of Mines and Mining Development in the previous Parliament had equally expressed concern of gross mismanagement at the coal miner.
“Firstly I am not aware that the Scheme of Arrangement was proceeding very well, in fact from the information that I got they defaulted from it. Secondly, it is not in dispute that there was a lot of mismanagement happening, to the extent that they hired a new Managing Director. So you are saying the Scheme of arrangement was going very well but the MD who was supposed to be there, being part of that court process was also not performing well to the extent that they had to remove him.
“So when I applied mind, I said lets proceed because we have to be seen doing something, these are public funds. The satisfactions of the law were satisfied – gross mismanagement at Hwange, the Government is owed money and the potential that if reconstructed it can be profitable.
He added that route taken by Government has checks and balances, and the government will stand guided and will submit to the outcome of the court.
The firm has a legacy debt of $352 million, and had entered into a Scheme of Arrangement with creditors.
HCCL has been honouring the terms of the Scheme until recently, resulting in the suspension of managing director Mr Shepherd Manamike, and finance and administration executive Mr Tawanda Marapira on allegations of sabotage and incompetence.
The company has old equipment which has resulted in high production costs. Employees are owed up to $70 million and HCCL is considering selling the Hwange Town so as to pay off the obligations.
The HCCL board said it has 345 000 tonnes of coal worth $13 million ready for disposal to meet short-term financial needs.
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