Redcliff municipality has pleaded with government to settle a long-standing $16 million debt to the local authority owed by the now defunct Ziscosteeel.
Council says the money is needed to help improve service delivery in a town where residents have gone for years without running water.
Redcliff is battling nearly $9 million in labour-related costs, $3 million in salary arrears and also owes nearby Kwekwe City $3 million.
Zisco, once the mainstay of Redcliff and most of the Midlands economy, stopped production in 2009, weighed down by management incompetence, corruption, political interference as well as undercapitalisation.
Government took over the company’s debts as part of efforts to attract investment and help revive the company.
The obligations included some US$16m owed to Redcliff town council.
“Ziscosteel debt is $16, 4 million and engagements are being done with respective stakeholders to recover this (money) as a total write-off would render the Council technically insolvent as creditors would exceed debtors,” said finance committee chairperson Nyasha Benza.
“Council has written to the parent ministry seeking its intervention so that we be paid in cash and Treasury Bills against $14, 7 million debt to Council following the Ziscosteel (Debt Assumption Bill) 2018.”
“We expect government to budget for the Zisco debt in its 2019 budget. We plead with the government to start settling part of the debt next year,” Kwekwe City Council Financial Director told a Finance Parliamentary Portfolio Committee recently.
Meanwhile, Redcliff has frozen the sale of stands amidst a deepening cash crisis.
The selling of stands has been one of Redcliff’s major revenue generation projects following resident’s failure to pay for services.
“As a local authority, we have suspended selling of stands at the moment.
“Considering the present economic environment, we have seen that it’s not feasible to sell the stands as we might sell below the market value,” Mayor Clayton Masiyatsva said.
He said council is battling a serious housing backlog but is not able to provide stands due to the present economic conditions.