18 May 2014

Zimbabwe: 'Zimbabwe Officials Nearly Scuttled Essar Deal'

Indian Ambassador to Zimbabwe Jeitendra Tripathi  has said the US$750 million Ziscosteel/Essar Africa deal was nearly scuttled by some individuals in government with vested interests in the project.

Addressing a Zimbabwe National Chamber of Commerce (ZNCC) Kwekwe branch business luncheon on Friday, Tripathi said if the senior government officials opposed to the deal had prevailed, Zimbabwe's prospects of ever courting international investors would have gone up in smoke.

"Essar has been fighting, communicating and petitioning the government of Zimbabwe for the past two years because some vested interests I would not like to name did not want this project to happen," Tripathi said.

However, he said, a team from his embassy together with Essar, persisted, ensuring that government honoured its pledge to bring to life the deal despite the governance problems affecting Zimbabwe.

"We kept on telling government and the people we interacted with that 'look we don't know what's wrong with the local system for which you have not been able to give them mining rights after two years of signing the agreement. But whatever is wrong, it is your house'," said Tripathi.

He said international investors were not worried about political parties or politics at play in the country they want to invest in, but about security of their investments.

"For an international investor, it hardly matters whether there is MDC government, Zanu PF, an inclusive government or whatever. For an international investor, it is the government of the Republic of Zimbabwe," he said.

Tripathi said the Ziscosteel deal became the litmus test on the ability of Zimbabwe to attract foreign investment. He said if the deal had collapsed, the country would have destroyed its chances of attracting foreign direct investment.

"If this deal falls flat, Zimbabwe will never attract any international investor again because all investors had been eagerly waiting to see the result of this. People have been saying if this deal can't happen when it was signed by the head of state, what of a deal between two private individuals," he said.

New Zimsteel chief executive officer Vinod Arora said his bosses met President Robert Mugabe on May 7 and were given assurances that the deal would not collapse.

Essar Africa Holdings in 2010 agreed to buy 54% in Zimbabwe Iron and Steel Company (Zisco), with the government keeping 36% and 10% owned by minority investors.

The initial plan was to upgrade the existing steel plant in the Midlands and produce 1,2 million tonnes of steel at a cost of US$750 million.

The deal however ran into problems after government refused to transfer mineral rights to New Zim Minerals.

A week ago, government finally agreed to transfer the mineral rights and Essar said it would build a new steel plant within two years.

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