A US$400 million deal between Indian firm Global Steel Holdings and the beleaguered Zimbabwe Iron and Steel Company (Zisco) is understood to have collapse
d, with sources indicating this week that Global Steel’s management had terminated their contract in frustration.
Sources indicated that a number of government officials wanted to benefit from the money injected by GSH at the expense of the loss-making parastatal’s revival
Global Steel’s Lalit Kumar Sehgal, who had been seconded by his company to become chief executive officer (CEO) of Zisco in April under a management contract, this week walked out of his job, forcing the government to appoint Alois Gowo to take over in an acting capacity.
Global Steel appointed Sehgal as CEO of Zisco after it acquired management control of the company in March.
Global Steel entered into a deal with the Zimbabwe government to take over management of Zisco for 20 years. The company was in turn expected to inject US$400 million into Zisco.
Gowo refused to comment when contacted yesterday, only saying: “They (Indians) are in Harare at the moment. They have been dealing with the Ministry of Industry and International Trade regarding their differences (with government officials.”
Ziscosteel chairman David Murangari also declined to comment on the issue, referring all questions to the Ministry.
“That deal was done by government. Why don’t you contact them; they would be in a better position to comment,” said Murangari.
Efforts to get comment from the ministry were fruitless.
Ziscosteel, once a major foreign currency earner in the 1980s, has been a perennial loss-maker, bleeding the fiscus through annual cash injections to prop up its operations.
Output at the iron and steel company has fallen sharply because its main furnace has been derelict for years.
The deal with Global Steel was expected to push output up to between 1,1 million to 1,4 million tonnes within 12 months from current production levels of 80 000 tonnes.
The latest development is likely to frustrate government efforts to lure international investment.