Maravi

(NEWZIMBABWE) Govt backtracks on Zisco privatisation

Govt backtracks on Zisco privatisation
by
06/05/2010 00:00:00

INDUSTRY and Commerce Minister Welshman Ncube says the coalition government has nixed a planned part-privatisation of the struggling Zimbabwe Iron and Steel Company (Ziscosteel) because the bidding firms are "too big".

The government had announced plans to significantly reduce its majority interest in the Redcliff-based company, attracting immediate interest from Indian firms Jindal Steel and ArcellorMittal -- the latter pursuing its bid through a South African subsidiary.

But Minister Ncube announced on Thursday that President Robert Mugabe had rejected the bids because the two companies were too big to invest in ZISCO.

"That is the feeling of the presidency, as strange as that might seem," Ncube said. "The feeling is that we are a small country and we will have problems with a big multilateral company. The thinking is that we need a medium-sized investor for ZISCO."

The announcement caught the two short-listed companies, and foreign investors at large, by surprise with ArcellorMittal saying it was yet to be formal advised of the development.

Ziscosteel, which has the capacity to produce one million tonnes of steel annually, has been idle for years, saddled by debts of more than US$300 million and lack of working capital.

Analysts say the company, once the biggest integrated steelworks in sub-Saharan Africa outside South Africa, probably needs up to a billion dollars to retire debilitating debts and fund a restart of production.

The coalition government announced upon assuming office that it would accelerate the disposal of a number of state-owned firms to raise money for the fiscus.

Zisco becomes the second company after mobile company NetOne to betaken off the list of companies targeted for privatization.

Finance minister Tendai Biti recently announced that sections of the coalition cabinet were not comfortable with the intended privatisation of NetOne because it was a “potential cash cow for the government”.

Labels: MDC, NEOLIBERALISM, PRIVATISATION, WELSHMAN NCUBE, ZISCO

posted by MrK @ 4:43 PM