HomeLocal NewsLancashire deal off the rails

Lancashire deal off the rails


LANCASHIRE steel revival has gone off the rails, with Botswana-based investor Whinstone Enterprises blaming government’s unprofessionalism and bureaucratic bottlenecks for the development.

Whinstone and the Lancashire Steel board signed a memorandum of understanding to bring the moribund wire-making firm back to its feet in July 2018.

As part of the deal, Whinstone committed to inject capital.

Official documents seen by the Zimbabwe Independent this week reveal that government officials have been dragging their feet on the deal despite several letters from Whinstone for the agreement to be consummated.

Former Industry minister Mangaliso Ndlovu, who was last week moved to the Environment, Tourism and Hospitality Industry ministry, in April this year announced government had suspended the deal.

He blamed the Botswana investor for failing to satisfy government standards and requirements, without mentioning them.

The Industry ministry then ignored requests by the Botswana firm to iron out issues.

In an interview, Whinstone Enterprises director Deepak Verma however said government was not clear on what exactly it wanted, adding it was showing no appetite to commit to trade agreements, thereby hindering progress.

He blamed government’s bureaucratic red tape for stalling the deal.

“First and foremost for the deal to move there must be the signing of the trade agreements. The laid procedures can only be done if the first step is followed and that has to be done by the government not Whinstone Enterprises,” Verma said.

“How can I import or bring anything into the country when the entity is not registered? In whose name or who will be the importer?

“I am still interested in the Lancashire deal, however, I don’t want to be dragged back and forth. It is frustrating. If government wants Lancashire to run, they need to do papers. They cannot expect an investor to come and do papers for imports of equipment.”

After Ndlovu announced the deal had stalled, Verma in May reached out to for “re-engagement” through an official letter.

“We would like to request for a re-engagement meeting to discuss the conditions of the Joint Venture signed between Whinstone Enterprises Pvt Ltd, Botswana and Lancashire Steel Kwekwe,” Verma wrote to the Industry ministry on May 21.

“We have requested for this re-engagement via several emails and would like to rectify points which need to be rectified as per your cabinet decision dated 4th April 2019. We have sent email about our willingness to re-engage where ever necessary for the Joint Venture to flourish and to start operationalise the plant.”

Government, through then acting permanent secretary for Ministry of Industry and Commerce Never Katiyo responded to the letter on May 27 acknowledging receipt and promising to look into the matter.

There has not been any further communication from government to date, according to Verma.

Ndlovu said he could not comment on issues to do with his former ministry but said he had not yet briefed new minister Sekai Nzenza on the Lancashire deal.

Documents reveal that both the Botswana investor and the Lancashire Steel management have been urging government to formalise the deal, which was signed last year, to no avail.

Lancashire Steel acting general manager Izekiel Machingambi on December 20 2018 wrote to government requesting that the MOU be formalised.

“We write to advise you that a meeting held on Thursday 20 December 2018 at Lancashire Steel, Kwekwe between the Joint Venture partners, Whinstone Enterprises required that the formalisation of agreement be resolved as a matter of urgency to enable it to implement its commitments under the agreement going forward with confidence. Under the circumstances we seek your assistance and support in resolving this matter,” Machingambi wrote to a senior official in the Industry ministry, one T Moyo.

On December 21, a day after Machingambi’s letter, Whinstone Enterprises director Deepak Verma also wrote to government on the same issue.

“We request to please formalise the agreement between the Lancashire Steel and Whinstone Enterprises urgently. It is a stumbling block to allow the Joint Venture to move ahead because it does not allow us to perform a number of requirements which will be required in industry, to give an example, registration of import and export issues for the Joint Venture, work permits etc . . . We request please take this task urgently as agreed in our discussions on the 18th of December 2018,” Verma wrote.

“. . . The Ministry wants and expects us to keep up with the timelines as mentioned in our presented document on the 18th of December 2018, therefore, it is key for us to have the document endorsed. The delays will have ripple effects on our performances and achievement of the timelines.”

Also on December 21, Verma wrote another letter to Moyo highlighting what needed to be done to speed up implementation.

“The certification of the confirmation of entity Lancashire Steel Joint Venture where Whinstone Enterprises and Lancashire Steel are together as per the Memorandum of Understanding signed on the 27th of July 2018, by the board of Lancashire Steel on behalf of its shareholders and Whinstone Enterprises on behalf of their shareholders. This is also going to ease and complete all the requisites in the country as an investor,” Verma said.

Verma also requested for an exemption of duty for a temporary period for raw materials to manufacture diamond fence, barbed wire and weld span.

According to the MOU, Lancashire was also expected to provide infrastructure for the plant, recruit skilled staff, secure scrap export and import permits and to assist in facilitating scrap export by a minimum of 33 000 metric tonnes per month.

The wire-making company was also expected to facilitate the exemption of duty on imported raw materials.

“To accept full responsibility and facilitating all regulating affairs, municipal requirements, Zimra, EMA (Environmental Management Agency), SEZ (Special Economic Zones) and immigration, and such to include but not limited to licenses, certificates and permits and the use and preparation

“To assume the obligation and responsibility and settle all liabilities and debts that would have accrued prior to the effective date,” the MOU said.

Whinstone Enterprises was supposed to provide personal skills, knowledge and expertise for the proper running of the plant and also to provide raw materials required for processing at the plant.

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