TALKS between government and representatives of Indian firm Global Steel Holdings failed to make a breakthrough last week, with sources indicating t
hat the Indian firm had decided to terminate a deal with the Zimbabwe Iron and Steel Company (Zisco).
Official media reports suggested this week that the deal between Zisco and Global steel was still alive, dismissing businessdigest’s report last week that the deal had collapsed.
However, sources indicated that Lalit Kumar Sehgal, who had been seconded by Global Steel to run Zisco as its CEO, left the country last Friday after government failed to table an acceptable proposal for the Indian firm to convince it to remain at Zisco under a US$400 million deal to revive the ailing steel maker.
Sources this week said Sehgal and other officials from Global Steel left the country on Friday for New Delhi, India, in frustration after their plans to revive the loss-making parastatal had been thwarted by government bureaucracy and interference.
Some government officials had reportedly solicited for a share of the US$400 million Global Steel wanted to inject into Zisco.
Permanent secretary for Industry and International Trade, Retired Colonel Christian Katsande, could however not be reached for comment.
Sehgal was seconded by his company to become CEO of Zisco in April under a management contract that went with the US$400 million cash injection.
He was replaced by Alois Gowo two weeks ago.
Prior to his appointment Gowo was Zisco’s projects and development manager.
Businessdigest understands that Sehgal and other senior officials from Global Steel informed the ministry of their desire to terminate the contract during the first week of August.
The Zisco board met on Thursday last week to discuss the collapsed deal with Global Steel and the parastatal’s turnaround strategy.
It was not immediately clear what the board had resolved to do following the collapse of the deal. Zisco representatives are expected to meet government officials to determine the course of action required to salvage the company from a deepening crisis.
Global Steel had 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.
Global Steel manages more than 14 metric tonnes of steel-making capacities in five countries in Europe, Africa and the Asia-Pacific.
The Indian company was roped in by government after previous negotiations between Zisco and Shougang International Trade and Engineering Corporation of China over a possible US$200 million deal collapsed because government declined to cede a controlling share of the company to the Chinese firm.