Maravi

Mutati regrets his statement on Zamtel evaluation report

Mutati regrets his statement on Zamtel evaluation report
By Chiwoyu Sinyangwe, Misheck Wangwe and Florence Bupe
Wed 16 June 2010, 04:01 CAT

COMMERCE minister Felix Mutati yesterday regretted his statement that Zambians would not understand the government’s sale of Zamtel from valuation report and asked that they listen to the “rational explanation from the government”.

And Mutati has said the RP Capital report on the valuation results of the net asset value of recently privatised Zamtel public will be made public at the end of this month as pressure continue to mount for the controversial report to disclosed.

Mutati has in the last two days come under fire from key interest groups who accused him of insulting Zambians for saying that they would never understand the RP Capital report on Zamtel’s assets.

Addressing the press yesterday, Mutati said he regretted the statement and that he could not insult the integrity of the Zambian people.

“I will never ever underestimate the intelligence of the people of Zambia... I draw my mandate from the people of Zambia,” said Mutati, who started the briefing by hand-shaking all journalists present. “The people of Zambia have tremendous capability to understand and analyse issues and I will never underestimate that capability.”

Mutati said the government was pleased with the amount of debate surrounding the controversial sale of three quarters of the Zamtel to Libya’s Lap Green Networks at US $275 million.

“I want to thank the people for holding government in good esteem and also for engaging government on this particular issue. It is critically important. As government, we work for the people,” Mutati said. “But let me emphasise that I do not underestimate the intelligence of the people of Zambia.”

And Mutati said the RP Capital evaluation report on Zamtel which cost the country US $12.8 million would be made public this month.

“The plan of action for government on this transaction is that as soon Parliament opens at the end of this month, government will make a comprehensive statement to Parliament, laying on the table all the issues, facts and figures and data surrounding this particular privatisation so that the people of Zambia have a total picture,” Mutati said.

“The report that will be tabled in Parliament will be full disclosure of the findings and the work done by RP Capital and the basis of the decision that was taken by government to select Lap Green as the preferred bidder and ultimately as one with which we can transact with on this transaction. When we present the report to Parliament, we shall give opportunity to you journalists and everyone who is going to come, to say ‘what else or what more do you want to know regarding this particular transaction?’ So, let’s not pre-empt that particular stage. It is coming at the end of this month and then a judgment can be made.”

Mutati said the government sold Zamtel in the expectation the move would mirror “success” achieved by Zanaco Plc in the post-privatisation.

“In pre-privatisation, Zanaco was registering taxable losses. At the end of 2009, Zanaco registered taxable profits in excess of K50 billion in terms of capital employed and profit after tax,” said Mutati. “Before privatisation, Zanaco was ranked number four despite its size… post-privatisation, it has been
ranked number one in terms of capital employed and profit after tax. The customer base before privatisation was 200 000; after privatisation, 400, 000...And the revenue of Zanaco have more than double last year had revenues in excess of K500 billion and they are paying all the taxes and dividends to government. And that the story of the impact of privatisation, it is our expectation that once we go through the whole process of privatisation, not only are we going to plug the losses, not only are we going to be denied the tax revenues, not only are we going to be denied the dividends, but that the reverse situation is going to happen.”

And the board of directors of Zamtel has approved the proposal by the company management to relocate its headquarters from Ndola to Lusaka.

Senior sources within the company disclosed that the board approved the relocation of the headquarters to Lusaka last month and it would be done immediately when the new owners, Lap Green Networks of Libya, take over the operations.

The sources said Zamtel workers were disturbed by the news that Lap Green Networks would retain some employees while some would be retrenched.

“We are told that they have been sieving employees at the headquarters and they have introduced two types of letters; for those that would be retrenched and those that would be retained and when you are retained you move to Lusaka immediately,” the sources said, adding that workers feared that only a handful of the employees out of the 403 who operate at the headquarters would be retained and strategic members of staff would be retrenched because the new owners would come with their own people.

Meanwhile, economic consultant Robert Sichinga has said the insistence by government not to release the valuation report on Zamtel by RP Capital was a sign that the whole transaction lacked transparency and was questionable.

Speaking on QFM’s Monday Night Live phone-in programme, Sichinga said the law stipulated that a report should be disclosed for any company under the process of privatisation unless there are compelling reasons not to do so.

“Right from the word go, when we reflect on the issue of the valuation of Zamtel, it was fraught with problems of transparency. In order to have answers on the sale of Zamtel, we need to know what the valuation was against which the Zambian government has accepted to sell it for US $257 million,” he said.

Sichinga said the involvement of President Rupiah Banda’s son and the unusual manner in which the valuation and sale Zamtel was done had compromised the confidence of Zambians in the country’s investment systems.

“No sensible person in their right frame of mind can say the sale or transaction was okay. Where is the report from RP Capital? We are actually shocked that ZCTU (Zambia Congress of Trade Unions) is saying the transaction was fair because we don’t know against which figures they are basing their argument,” he said.

Sichinga demanded to know what efforts the government had put in to try and save the telecommunication service provider from collapsing before deciding to sell it to an international buyer.

He said by virtue of selling the 75 per cent majority shareholding to LAP Green, government had reduced Zamtel from being a citizen owned company to a citizen influenced one.

Sichinga explained that Zamtel had actually been sold for less than US $257 million, taking into consideration the costs incurred in the laying of the fibre optic totalling about US $70 million.

“Government should have provided strategic plans to save Zamtel from collapse. If they had to invest the 10 per cent of the company’s value which is being paid to RP Capital into its operations, it could have helped to revive Zamtel. Surely this doesn’t make sense,” said Sichinga.

Labels: FELIX MUTATI, JOBLOSSES, PRIVATISATION, ROBERT SICHINGA, ZAMTEL

posted by MrK @ 12:15 PM