CONFUSION reigns in government circles over how to kick off deals signed with China and Russia.
Three of the five deals secured by government with a Russian delegation last week
overlap and in most instances duplicate similar deals signed with the Chinese earlier this year.
Russian investment company RusAviaTrade signed a deal with the Zimbabwe Electricity Supply Authority and Hwange Colliery, promising to upgrade the operations of the two companies. Government in February signed similar deals with Catic of China to rehabilitate and expand the production capacity of Hwange Colliery Company, making the Russian deal a duplication of the of the previous agreement. The Chinese deal was valued at US$70 million.
RusAviaTrade’s deal with Zesa’s subsidiary Zimbabwe Power Company is again a replica of Catic’s agreement with the same subsidiary through which Hwange thermal power station was to be expanded under a US$400 million deal.
RusAviaTrade’s deal with the Civil Aviation Authority of Zimbabwe is also replicated in an agreement signed between Chinese companies and the same parastatal.
Critics this week questioned whether the Chinese deals had been set in motion before similar understandings were entered into with the Russians. In addition, Zesa, Hwange and CAAZ, the Zimbabwe Tourism Authority and the Ministry of Transport and Communications also signed deals with the Russians and are expected to benefit from the investments.
The Russian overtures follow similar attempts at investments from Chinese and South Korean companies in June, giving a faint hope to the fastest shrinking economy in the world.
The country’s hostile investment climate, coupled with political instability and lawlessness in the form of property rights violations, as well as continued shortages of foreign currency, fuel, electricity, spares and basic commodities, have deterred foreign direct investment from traditional western companies. It is unclear how Russian investors plan to sidestep these pitfalls.
The 48-member Russian delegation, which included 17 journalists, explored other investment opportunities. RusAvia Trade provide Russian aviation products, including new and used aircraft, helicopters, spare parts and related services.
Its parent company is RusAvia Group, a group of Russian and Western companies involved in the aviation business. The group includes design and production companies, exporters and companies related to the Russian aerospace industry.
Zimbabwe is trying to buy commercial aircraft from Russia to boost its depleted national fleet. Government recently ordered several Russian planes for national carrier Air Zimbabwe, but the airline’s engineers have rejected the aircraft, saying they were “flying coffins”.
RusAvia director for external affairs Yury Panchenko said the group of Russian investors would return in a month to follow up on their deals.
“We will create a website to tell the Russian business community about investment opportunities in Zimbabwe,” Panchenko said at the weekend.
The delegation left the country last Tuesday after a seven day visit.