Inter-parastatal debt stiffles all

17 Feb, 2019 - 00:02 0 Views
Inter-parastatal debt stiffles all Finance and economic Development Minister Mthuli Ncube presents a paper on economy at Zimbabwe National Defence University in Harare yesterday.-(Picture by Tawanda Mudimu)

The Sunday Mail

Africa Moyo
Senior Business Reporter

A number of parastatals are suffocating as a result of other State-owned companies’ failure to pay for services rendered and have approached Government for recourse, officials have said.

This has exposed them to serious operational challenges, particularly at a time when they are also being pursued by the Zimbabwe Revenue Authority (Zimra) that is demanding statutory fees from them.

Government is reportedly seized with mechanisms of resolving parastatal debt to free companies that are tottering on the brink of collapse.

Last week, Finance and Economic Development Minister Professor Mthuli Ncube told The Sunday Mail Business that Government was concerned over interparastatal debt.

Minister Ncube could not be drawn into revealing the size of the interparastatal debt, saying he did not have the figures on his fingertips.

But information at hand shows that Air Zimbabwe owes large sums to a number of parastatals such as the Civil Aviation Authority of Zimbabwe (CAAZ) and the National Handling Services (NHS).

The companies are owed a combined US$68,8 million for services offered to Air Zimbabwe.

CAAZ is owed US$44,8 million dating back to 2009 for the provision of airport and air navigation services, while NHS is also owed US$24 million for passenger and cargo handling.

The companies say the debts are negatively impacting on operations.

They are now pinning their hopes on getting their money from Air Zimbabwe administrator Reggie Saruchera.

NHS general manager Mr Godknows Marawanyika, recently told the Parliamentary Portfolio Committee on Transport and Infrastructure Development that: “Air Zimbabwe has not been consistent in its operations so the reconstruction has come up with a programme of action, which if followed would help turnaround the company.

“Because of the challenges they (Air Zimbabwe) have been facing, the company has not been paying its obligations and NHS is US$24 million.”

Air Zimbabwe was placed under reconstruction on October 4 last year.

CAAZ chief executive officer Mr David Chaota said interparastatal debt was choking their operations.

Mr Chaota added that they are in negotiations with Zimra, which they also owe an unspecified amount.

“It’s an ongoing issue we have with Zimra to see how best the situation can be handled,” said Mr Chaota.

“I am aware that it’s a matter that has been handled at a very senior level in Government, on inter-parastatal debt.

“But as a parastatal, we have also taken a decision to engage Zimra directly and find a lasting solution.

“The shareholder (Government) has also been engaged and made aware of the obtaining situation and the impact it will have on the operations of the Authority and combined forces are being made between ourselves and the Ministry of Finance and Ministry of Transport to find that resolution.”

Govt perspective on interparastatal debt

Prof Ncube said Government was equally concerned about the interparastatal debt saying the parastatal reforms currently underway are part of efforts to address the challenge.

“I don’t have a figure (of interparastatal debt) here with me. I like figures so I don’t want to give incorrect figures, but inter-parastatal debt is an issue.

“That is why we are restructuring and making sure that it never becomes a problem in future. We extinguish it (interparastatal debt) in the future. You see, one of the reasons why we are dealing with this State Enterprise reform is to make them efficient,” said Prof Ncube.

Government has lined up 41 parastatals for reforms ranging from liquidation, full privatisation and transformation to regulator, merging and demerging, as well as departmentalisation into existing ministries, depending on how strategic the parastatals are and their respective performances.

The move is designed to take them back to profitability.

Government says 99 percent of them are loss making but continue to hold onto idle and unproductive labour, accumulating salary arrears and continuously requiring bailouts from Treasury to finance their operations and debt servicing.

Top international experts have been roped in as Government seeks to craft the best deals that will benefit citizens.

The country’s new economic blueprint, the Transitional Stabilisation Programme (TSP), is at the centre of reforms underway in the country, to stabilise the economy by targeting the “twin deficits” of fiscal and current account, which have become major sources of overall economic vulnerabilities including inflation, sharp rise in indebtedness, accumulation of arrears and foreign currency shortages.

The TSP sees parastatal reforms as critical to ensuring sustainable economic growth and improved service delivery.

Minister Ncube said at the core of the restructuring initiative is Government strategy on dealing with “under-performing parastatals”.

In 2016, 38 out of 93 audited SOEs incurred a combined US$270 million loss because of dislocated corporate governance practices and ineffective control mechanisms.

Institutions lined-up for privatisation include the Infrastructure Development Bank of Zimbabwe (IDBZ), Zupco, Agribank and some subsidiaries of the Industrial Development Corporation (IDC).

Firms scheduled for ZSE listing are Petrotrade, Willowvale Motor Industries, Chemplex Corporation and Deven Engineering.

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