Farirai Machivenyika Senior Reporter
President Mnangagwa has assented to the Zimbabwe Iron and Steel (Debt Assumption) Bill enabling Government to take over its approximately $500 million debt it owes to various local and foreign creditors.
The notice of the signing was published under General Notice 370A in the Extraordinary Government Gazette published on Monday.
“The following law, which has been assented to by His Excellency the President, are published in terms of section 131(6) of the Constitution of Zimbabwe-Ziscosteel (Debt Assumption) Act, 2018 (No.5 of 2018),” said Chief Secretary to the President and Cabinet, Dr Misheck Sibanda yesterday.
According to the Act, the debts of Zisco consists of liabilities incurred by the company before January, 1, 2017 and are reconciled and validated by the Debt Management Office under the Ministry of Finance and Economic Development or arising from a Government guarantee or undertaking.
According to the schedule of the Act, Ziscosteel owes $211 912 400 in external loans, $6 095 620 to external suppliers, $57 696 085 in domestic loans and $219 113 219 to domestic suppliers, utilities and statutory obligations.
This brings the total Ziscosteel debt to $494 817 324 million.
The Act says the Debt Management Office, when validating and reconciling claims, will require copies of the loan agreement or contract, other documents supporting the claim that include shipment schedules showing commodities supplied, quantity and price, initial balance, disbursements made, payments effected and the dates and principal amount of claim and interest.
Minister of Industry and Commerce, Dr Mike Bimha yesterday welcomed the signing of the law.
“This is a welcome development because it means investors can freely come and negotiate without worrying about Zisco’s debts.
This will clear its balance sheet.
“Investors do not want to participate in companies that are indebted that is why we have been asking Government for a while now to take over the debt. The development makes it easier to negotiate with investors,” said Dr Bimha.
The company stopped operations in 2008, making redundant over 5 000 employees.
The Act empowers the President, acting on advice of the Minister (finance) to repeal the Act once all debts have been settled.
Ziscosteel’s debts are a major contributor to its failure to attract investors over the years.
However, Government signed a $1 billion deal with a wealthy Chinese investor, Mr Zhang Li through his company, R&F in August last year, for the revival of the mothballed operations.
Mr Zhang met with President Mnangagwa during his State Visit to China and indicated his commitment to proceed with the project.
Previous attempts to revive the giant steel company through Global Steel Holdings and Essar Africa Holdings have failed due to various reasons.