HomeLocal NewsGovt cancels Lancashire deal under a cloud

Govt cancels Lancashire deal under a cloud


GOVERNMENT has cancelled a joint venture between Kwekwe-based Lancashire Steel and Botswana-based investor Whinstone Enterprises without revealing the reasons, the Zimbabwe Independent has established.

A memorandum of understanding (MOU) between Whinstone and Lancashire was signed in July 2018, but government officials frustrated the investor by dragging its feet despite a push by the Botswana company to consummate the deal.

The Independent has, however, established that cabinet disapproved the deal in April and communicated the decision to Lancashire Steel board chairperson Ngwabi Bhebe in a letter copied to Whinstone director Deepak Verma. The letter was written by former Industry minister Nqobizitha Mangaliso Ndlovu.

Ndlovu said the investor had failed to meet the expected requirements. However, he would not spell out the specific failings.

“Cabinet declined to approve the agreement, arguing that it was not a joint venture agreement in its nature. Cabinet nullified the agreement guided by Section 13(1) of the Joint Venture Act (Chapter 22:22) which stipulates that, ‘no contracting authority shall award a project or sign a Joint Venture Agreement relating to the project unless the Joint Venture Agreement has been approved by the cabinet in accordance with this Act, and any agreement required to be approved that is purported to be conducted without such approval will be null and void’,” Ndlovu said in a letter dated April 2, 2019.
“The parties must first comply with the requirements stipulated in the Joint Venture Agreement.”

Verma continued to push for answers while expressing desire to carry on the project, resulting in government advising him to pursue other interests, through a letter dated September 20, 2019 written by permanent secretary Mavis Sibanda.

“Reference is made to your letter dated 11 September 2019, wherein expressed interest on the above-captioned matter. You will recall that the Joint Venture Agreement between Lancashire Steel and Whinstone Enterprise was nullified as was advised in a letter dated 02 April 2019, written to the chairperson of Lancashire Steel and copied to you. Lancashire Steel has since informed the ministry of their new recovery plan,” Sibanda said.

“In this regard, I wish to advise that the ministry will be ready to assist you in any other opportunities that you may wish to pursue in Zimbabwe.”
Verma, however, told the Independent he was optimistic that government might reconsider its position as his company had not flouted the MOU.

“The letter which was written in April has nothing to do with us, because if we did not comply did they contacted us and told us what was the reason on where we were not complying. For an agreement to pass through the Joint Ventures Act it is the Zimbabwe counterpart not the investor,” he said.

“If the agreement was not compliant, why did previous boards kept on asking us to bring equipment and our investment in the country from the 28th of July 2019 till our first engagement with the ministry under Minister Ndlovu. Why did the ministry not contact us to say that Whinstone you are not compliant? The minister just sent us a letter at his convenience. To show our commitment to the deal we even reconnected electricity at Lancashire.

“The most embarrassing thing was that we even gave local media an advert that Lancashire is open for business, under new entity Lancashire JV. The people even sent CVs but that is down the drain crushing hopes which is painful.”

Verma on November 15 wrote another letter telling government that his company was still interested in Lancashire. “We received a letter dated 20 September 2019 from the desk of Mr Truman Moyo, where we were informed that Lancashire is pursuing a new revival plan. We would request to find out if their plan has come to fruition, if not we will still like to prove our interest in Lancashire Steel,” he said.

Last week, Verma expressed his frustration at the way government had handled the deal, adding government was not clear on what exactly it wanted.

He also said government was not showing appetite to commit to trade agreements, thereby hindering progress.

“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?”

Ndlovu last week 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.

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