Zimpapers Logo

Senior Reporter
ZISCOSTEEL’S foreign creditors wanted to attach Air Zimbabwe planes to force government to settle the steelmaker’s debt that has ballooned to more than $300 million, Parliamentarians heard last week.The government assumed the Ziscosteel, now NewZim Steel debt, when it sold 54 percent shares in the steelmaking company to an Indian firm, Essar Holdings in 2011.

The investor took over the foreign debt with the two parties agreeing to share the domestic debt, which stood at $72 million, but is now at more than $200 million, based on 40 percent and 60 percent to government and Essar, respectively.

Some of the foreign firms owed by Ziscosteel include KFW of Germany and Sino Sure of China, but it could not be established which one between them was after Air Zimbabwe planes.

Industry and Commerce Deputy Minister Chiratidzo Mabuwa, said foreign creditors wanted to attach the national airliner’s property because government has a share in New Zimsteel.

She was responding to Zanu-PF senator for Mashonaland Central, Cde Damian Mumvuri, who wanted to know what government was doing to ensure resumption of operations at NewZim Steel.

“Foreign creditors wanted to attach Air Zimbabwe planes because government has shares in NewZim Steel but we are happy that, that has been sorted because Essar has taken over the debt,” Deputy Minister Mabuwa said.

“It is the foreign debt that was now encroaching to the other Zimbabwe assets that we celebrate today that has been solved and taken over by Essar.”

She said the investor was committed to seeing the deal succeed and was already engaging local creditors to settle the debts.

The local liabilities are related to employee benefits, pension fund and local authorities’ obligations.

At the signing of the agreement the local debt stood at $72 million but soared to more than $200 million because the inclusive government did not pay anything towards liquidating the debt.

Deputy Minister Mabuwa said NewZim Steel would in the meantime import steel billets from India and South Africa to ensure resumption of operations.

NewZim Steel employees have gone for more than three years without full pay as bickering over operational modalities stalled operations.

The government and Essar have since agreed to immediately implement interim measures that include injecting fresh funds into NewZim Steel to kick-start revival and offer relief to workers.

The parties will import feedstock in the next six months for sale through existing NewZim Steel distribution centres.