Hwange Colliery to compensate merchants (05-09-07)

HWANGE Colliery Company Limited will have to fork out billions of dollars in compensating coal merchants who had made advance payments of coal prior to the dismantling of the middleman’s role in coal distribution cycle.
HCCL spokesperson Clifford Nkomo said yesterday that due to operating

constraints facing the coal miner, coal merchants would be refunded.
Nkomo said the figures were being reconciled. He said the figures would also be worked taking into consideration movement of the CPI inflation.
“We have our operational constraints and we are unable to supply them with coal,” he said.
Nkomo could not be drawn into disclosing the actual outstanding tonnage apart from saying, “it is a month’s supply.”
Over a month ago, the company abandoned its alliance with coal merchants, preferring instead to deal directly with the end user, Hwange said in a statement.
Before the suspension, Hwange had been dealing with 25 merchants.
Merchants have tried in vain to re-negotiate contracts with Hwange, or at least lift the ban.
In a previous interview, HCCL managing director Fred Moyo indicated “no intentions to rescind the decision”.
Sources at Hwange, however, indicated that apart from merchants, some individuals who took advantage of loopholes in coal distribution were also owed a “substantial tonnage”.
An official with the Coal Merchants Association who requested not to be named said it was unfair that HCCL had opted to refund them at a time when their money has lost value.
“We understand challenges that Hwange is facing but we feel they should have given us gradually coal supplies than refunding us. It is quite unfair,” the official said.
Coal supplies to merchants were suspended in mid-July during the height of Government’s price blitz as HCCL felt the merchants were prejudicing the final user.
By that time, HCCL was selling coal at $5 million per tonne but merchants were charging end users between $25 million and $30 million per tonne.
Coal merchants argued that the price at which coal was being sold to final consumers was due to high transport costs, which were averaging between $15 million and $20 million per load.

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