Indians pull out of ZISCO deal

HARARE - Political interference has scuttled a US$400 million deal with an Indian firm to rehabilitate Zimbabwe's ailing government-owned iron and steel works in an agreement that was expected to boost production and save over 5 000 jobs. The state-owned Zimbabwe Iron and Steel Company (Ziscostee

l), a key foreign currency earner before independence in 1980, had its 20-year management contract with Global Steel Holdings Limited (GSHL) cancelled last week over what the Indian firm called “undue political pressure.” The firm indicated it was opting out of the deal due to “meddling” and has since recalled the CEO it had seconded to the Redcliff plant, Lalit Sehgal. A senior manager at Zisco, Alois Gowo has replaced Sehgal as acting CEO with effect from Thursday last week, following the nullification of the deal. Industry sources revealed that the deal fell through due to interference by government officials, who also wanted to benefit from the hefty investment. Under the deal GSHL was expected to inject foreign currency for rehabilitation of Ziscosteel plant components under a 20-year management contract for the plant, which however was supposed to remain government-owned. The agreement marked one of the biggest foreign investments seen in recent years in Zimbabwe, which is struggling in the seventh year of a deep economic and political crisis. President Robert Mugabe’s government has previously identified Ziscosteel among underperforming state companies to be privatised under a plan to revive the southern African country’s ailing economy. Ziscosteel was the main foreign currency earner prior to independence from Britain in 198O, but output has fallen sharply to just 78 000 tonnes of steel per annum because its main furnace – which accounts for 70 per cent of its production – has been derelict for years. Reserve Bank governor Gideon Gono, who forged the deal, was unavailable for comment but he is on record stating the deal was expected to see output leap to 1,1 million to 1,4 million tonnes within 12 -18 months. – Own correspondent

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