Mnangagwa, Mabuwa dodgy on ZISCO-ESSAR deal

Vice-President Emmerson Mnangagwa and Deputy Minister of Industry and Commerce Chiratidzo Mabuwa were a bit dodgy about what really happened to the ZISCO-ESSAR deal when they were asked by two parliamentarians to explain.

Kwekwe Central Member of Parliament Masango Matambanadzo asked what was the government policy on investors who come into the country, takeover a company, fail to re-open it and just leave?

Mabuwa said it would take a lot of time to explain what really happened in the ESSAR deal.

“It will take a lot of time for me to explain what exactly happened in the ESSAR case. I would want to promise this august House that the Government of Zimbabwe in that agreement with ESSAR, there is no clause that is not going to be scrutinised so that each party is bound by the terms of the contract and the consequences of what would happen to them if they were to breach the contract will come into effect,” she said.

Mnangagwa painted a different picture when asked by Mabvuku-Tafara MP James Maridadi why ESSAR was failing to operate.

He said initially, the problem was lack of collaboration between the Minister of Industry, Welshman Ncube of the Movement for Democratic Change at the time, and the Minister of Mines, Obert Mpofu of the Zimbabwe African National Union-Patriotic Front.

“The initial MoU and the agreement was undertaken during the inclusive government and the Ministers who were involved came from different political parties at the time. There was no serious collaboration between the then Ministers and ESSAR found itself moving from one Minister to another for a period of two years. The Ministry of Industry and Commerce was under an hon. Minister from another party and the Ministry of Mines and Mining Development was also under a Minister from another party. We discovered that there was no cooperation going on,” Mnangagwa said.

“However, down the line, ESSAR which had raised some funding for the project could not keep the money for several years sitting without implementation. When Government became aware of this situation, we intervened. We have reached a situation where ESSAR is now willing to take on board other companies in order to marshal the financial needs required to resuscitate ZISCO, because the earlier financial package that had been raised moved elsewhere. Where it moved, a plant is now functional.”

Q & A:

*MR. MATAMBANADZO: Thank you Madam Speaker. My question is directed to the Minister of Industry and Commerce. What is Government policy as regards investors who come here and bid, take over a company such as ZISCO Steel, that they would have taken it over and then they fail to re-open it for the next five years? At present we hear that they left and that they failed, people are also told in the next breath that they are still here. If they have left, does the law just allow them to leave without anything being done to them? Thank you.

*THE DEPUTY MINISTER OF INDUSTRY AND COMMERCE (MS. MABUWA): Thank you Madam Speaker. I would want to thank the hon. member for such an important question which affects all of us as it regards the law or the policy of Government between the investors and Government. The law comes into effect after an investor will have written their own contract with the Government of Zimbabwe. There would be policy to see if the contract that has been signed, whether it is a Memorandum of Understanding (MoU), to see what binds the two parties. In that agreement, there is always a clause that looks at what will happen in the event that one party fails to meet the obligations of their contract.

So every contract including the one that he has mentioned for ESSAR, there is a clause that talks about what happens in the event that any of the two parties breaches the contract, and the consequences that are inherent thereto. It will take a lot of time for me to explain what exactly happened in the ESSAR case. I would want to promise this august House that the Government of Zimbabwe in that agreement with ESSAR, there is no clause that is not going to be scrutinised so that each party is bound by the terms of the contract and the consequences of what would happen to them if they were to breach the contract will come into effect. I thank you.

*MR. MARIDADI: Minister, the question that the public would want to understand is why Essar is failing to operate?

THE DEPUTY SPEAKER: Is it originating from the first one? [HON. MEMBERS: Yes]- No, I think on that one …

MR. MARIDADI: It is originating from the first one because the question by the hon. member was about ZISCO Steel and ESSAR. So, it is an extension of the question Madam Speaker.

THE DEPUTY SPEAKER: The question was, are they just left to go without anything?

MR. MARIDADI: And the follow-up is why has ESSAR failed to operate, and if they have gone, why did they just go without operating?

THE VICE PRESIDENT AND MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS (MR. MNANGAGWA): I am glad that the question has been asked and it is important that the House as well as the nation be informed about the status of the arrangement that had been undertaken between the Government of Zimbabwe on the ZISCO and ESSAR issue. The initial MoU and the agreement was undertaken during the inclusive government and the Ministers who were involved came from different political parties at the time. There was no serious collaboration between the then Ministers and ESSAR found itself moving from one Minister to another for a period of two years. The Ministry of Industry and Commerce was under an hon. Minister from another party and the Ministry of Mines and Mining Development was also under a Minister from another party. We discovered that there was no cooperation going on.

However, down the line, ESSAR which had raised some funding for the project could not keep the money for several years sitting without implementation. When Government became aware of this situation, we intervened. We have reached a situation where ESSAR is now willing to take on board other companies in order to marshal the financial needs required to resuscitate ZISCO, because the earlier financial package that had been raised moved elsewhere. Where it moved, a plant is now functional. I thank you.

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