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(ZIMPAPERS) Parastatals restructuring in limbo

Parastatals restructuring in limbo
Saturday, 25 June 2011 23:55 Local News
By Charlotte Musarurwa

THE restructuring of parastatals and State enterprises is in limbo, with only one company, Ziscosteel, having made significant progress.

Analysts say the Government is not fulfilling its promise in line with the Cabinet decision in August last year which identified the priority list of 10 State enterprises and parastatals (SEPs) for restructuring. There are about 78 State enterprises and parastatals in Zimbabwe, but this number excludes subsidiaries.

State enterprises, when operating efficiently, have the potential to contribute about 40 percent of Gross Domestic Product, thus underlining their importance to the economy.
A major cause of the delays in the restructuring of State enterprises has been lack of specific legislation to operationalise the process.

Earlier this year, Minister of State Enterprises and Parastatals Gorden Moyo said his ministry was in the process of crafting a State Enterprises Management Bill to promote efficiency in the implementation of the privatisation drive.

The law would see the Ministry of State Enterprises transforming into a fully-fledged ministry as opposed to a mere department in the Ministry of State.

The Sunday Mail has established that the mooted restructuring policies were still on paper and yet to be implemented.

Mr Moyo said last week that progress since the adoption of the restructuring programme had been lethargic.

“The pace is very slow, but we have gone a long way with some parastatals such as Zisco,” he said.

“We have also made tremendous progress pertaining to the Grain Marketing Board and Zimbabwe Power Company, but the other companies are still coming up.”
Some analysts say the Government must put more effort into the restructuring programme.

Economic analyst Mr Blessing Sakupwanya said not all the parastatals needed to be restructured.

He said the Government must bear in mind that some parastatals had to be retained for the future.

“My opinion concerning this programme is that it has been talked about again and again,” said Mr Sakupwanya.

“There is no progress which is taking place since it was announced. As a Government, there are some entities which they need to keep since we have an economy which is not performing well.”

Mr Sakupwanya said most of the parastatals were for public services, so they needed to be handled properly.

Over the years, State enterprises and parastatals have groaned under numerous macro-economic challenges that have contributed to a significant decline in their performance.

These include liquidity challenges, which had a negative bearing on the procurement of new equipment, technologies and spares, and a huge debt overhang.

Lack of good corporate practices, coupled with inept management in most instances compounded the situation.

Some observers are sceptical of the restructuring models that have been proposed for Noczim, Cold Storage Company and Grain Marketing Board.

They argue that the proposals would result in the spin-off of more and smaller companies at a time when the entities are failing to attract adequate capital injections.

Minister Moyo indicated in a report on State enterprises and parastatals submitted to the Parliamentary Portfolio Committee on State Enterprises and Parastatals last week that a proposal to lease the Cold Storage Company’s Bulawayo abattoir and ranches was approved by Government last year.

But the investor withdrew at the conclusion of the deal citing financial problems.

The report shows that the restructuring of some of entities like Air Zimbabwe, National Railways of Zimbabwe (NRZ), NetOne and TelOne is yet to commence.
The restructuring proposals for the entities have not yet been considered as the Ministry of Transport, Communi-cations and Infrastructure Development has not been appraised.

Concerning Ziscosteel, the negotiations were concluded with Essar Holdings and a shareholders’ agreement was signed with Essar Holdings acquiring 53,4 percent shareholding, with the Government shareholding slashed from 89 percent to 35,6 percent.

Minority shareholders now own the remaining 11 percent.

But negotiations to conclude the shareholders’ agreement were protracted due to issues related to ownership of the Bimco iron ore reserves under Zisco.

National Oil Company of Zimbabwe (Noczim) has been unbundled into two companies, namely Petro Trade (Pvt) Ltd and the National Oil Infrastructure Company of Zimbabwe (Pvt) Ltd.

The two companies became operational on January 1 this year.

Transfer of assets from Noczim to the successor companies for accounting purposes was also concluded at the same date.

The restructuring programme has resulted in 106 employees being rendered redundant and are in the process of being retrenched.

With regard to the GMB, the restructuring proposal seeks to unbundle the entity into the Strategic Grain Reserve and a Special Purpose Vehicle company with five commercial strategic business units.

The business units would be the Commodity Trading, Farming and Farmer Support, Agro-Processing, Logistics and Polybag Manufacturing.

The commercial units will then enter into partnership with investors for the recapitalisation of the companies, while the Strategic Grain Reserve would remain the responsibility of GMB.

Minister Moyo said his ministry had contracted PricewaterhouseCoopers and the Institute of Directors of Zimbabwe to design and execute a corporate governance training programme for workers in parastatals.

The ministry is going to spend US$50 000 in the first phase of training targeting at least 450 participants drawn from various parastatals.

The training is targeting chief executive officers, finance directors, company secretaries and non-executive directors of the entities.

But some analysts feel that more emphasis should be put on restructuring, rather than training.

“Why do we have to spend money on training programmes?” asked Mr Sakupwanya.
“We have to look at the critical point of restructuring. Emphasis should be on the restructuring programme and everything is done stage by stage.”

-The Sunday Mail

Labels: PARASTATALS

posted by MrK @ 5:06 PM