Time to act on Essar deal

HARARE - Govevrnment’s threats this week to cancel Essar Africa’s licence to establish a 600 megawatt (MW) thermal power plant after the company failed to commence the project shows government’s ineptitude.

Essar, the African unit of India’s Essar Group in November 2010 agreed to buy 54 percent in the country’s collapsed steel giant, Ziscosteel (now New Zimsteel) in a deal worth $750 million but implementation has been delayed due to squabbles between them and government.

As part of the deal, Essar had proposed to build a 600MW power plant for its new blast furnace, which is also under planning and is reportedly working on a feasibility study and the environment impact assessment.

However, what is sad is that five years down the line, the deal is yet to materialise and it is the thousands of Ziscosteel workers, their families and the Redcliff community that continues to suffer with the delays that are characterising the operationalisation of Essar.

What is more crucial is that the country may have been deprived of an opportunity to ease electricity shortages by the construction of power plants by Essar and other Independent Power Producers (IPPs).

Zimbabwe is currently producing approximately 1 200MW of power per day against a daily demand of 2 200MW yet over a dozen IPPs that were licenced since 2009 have a capacity to produce a combined electricity output of above 5 000MW.

Government must put its foot down and make sure that Ziscosteel is re-opened soon or it must cancel the deal and open doors to other serious investors.

It is very unfortunate that, five years down the line since the consummation of the Essar deal, there is still no blast furnace roaring in Redcliff to melt iron ore at Ziscosteel.

The downstream industries that had hoped to benefit from the revived steel giant have either downsized or closed shop. It must be noted that at its peak the giant company used to be backbone of the country’s economy.

Many downstream companies such as Lancashire Steel, Haggie, Steelmakers and Yreka in Kwekwe and Zicvast in Gweru used to depend directly on Ziscosteel products.

Redcliff itself has been reduced to a ghost town with moribund structures staring despondently at a disease prone environment. We have since established that there are still over 3 000 workers there, but all still there hoping the steel giant will start operating soon.

The country must not continue to be held at ransom by investors who lack the financial muscle to make industries operational.

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