Red-tape threatens ZISCO revival

Written by ZimOnline

Monday, 08 February 2010 17:08

HARARE – Zimbabwe is stalling on naming a new investor for the Zimbabwe Iron and Steel Company (ZISCO) months after the parastatals ministry recommended the winning bidder, in a move that risks scuttling badly needed foreign investment into the recovering economy, a senior government official told ZimOnline.
The Ministry of State Enterprises and Parastatals last September shortlisted global steelmaker Arcelor Mittal’s South Africa unit and a consortium led by number two Indian steel producer Jindal Steel and Power Ltd, to take a majority stake in ZISCO. ZISCO has been mothballed for two years, but the privatisation of what was at its peak the largest integrated steelworks in Africa outside South Africa, would have resuscitated production given the strongest signal from the unity government that it was determined to sell off badly performing state enterprises, that are a drain on the fiscus.
But a senior government official said nothing had moved since the State Enterprises and Parastatals Ministry carried a due diligence exercise on Arcelor Mittal South Africa and the Jindal Steel and Power Ltd-led consortium last October and recommended a winning bidder to the Ministry of Industry and Commerce. “Nothing has happened so far and investors are getting very, very anxious,” the official, who is involved in the privatisation of ZISCO, said. “We did our job and Minister (for Industry and Commerce, Welshman) Ncube should have convened a cabinet committee on privatisation to come up with a final position to take to the principals but this has not happened,” the official said.
Now the two bidders are anxious and continuous delay would give investors an impression that Zimbabwe is not yet ready to welcome foreign investment. “We are getting phone calls everyday from India and South Africa and the question is always ‘is this how you do business in Zimbabwe?’. Equipment is rotting at ZISCO, it is our national asset and we need to take advantage of it,” the government official told ZimOnline. Joel Gabbuza, State Enterprises and Parastatals Minister referred all questions to Ncube, who was unreachable for comment.
Jindal Steel is India’s second largest steel maker after Arcelor Mittal and the two companies would bring desperately needed capital and technical expertise to ZISCO, which used to directly and indirectly employ more than 3,000 employees.
Foreign investors are keen on investing in the country, that registered its first growth in more than a decade in 2009, but political uncertainty has forced them to hold back. Zimbabwe is desperate to raise more than $8 billion to reconstruct the devastated economy but Western donors, who are able to provide the money say the unity government should fully implement the September 2008 political agreement. “The successful disposal of shares in ZISCO will definitely give confidence to investors that there is no going back on privatisation and re-aligning this economy. Its something that has to be done,” John Robertson, an economic consultant said. Saddled with $300 million in local and foreign debt, ZISCO has a capacity to produce up to 1 million tonnes of steel annually.

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