Government has committed itself to take up TelOne’s legacy debt under a debt warehousing initiative as the money owed continues to weigh on the company’s operations.
Cabinet in July approved the assumption of over US$1 billion worth of debts accumulated by some critical state and public enterprises as part of its accelerated efforts to make them attractive to potential suitors.
TelOne, which was established after the unbundling of the then Post and Telecommunications Corporation (PTC) in 2000 inherited a debt, which has been haunting it. The debt, which stood at US$374 million as at October 2017, has been said to be responsible for weighing down operations at TelOne.
Minister of Information and Communication Technology Supa Mandiwanzira told businessdigest last week that Finance minister Patrick Chinamasa was working on the modalities of the debt takeover, the specifics of the debt assumptions were with TelOne.
“We have written to the Ministry of Finance and it has committed to taking over the debt, particularly TelOne under the government debt warehousing. We are now awaiting the ministry to action that commitment,” he said.
“I have spoken to Chinamasa and he says he is still committed and working on the modalities of how to do it.”
The debt has been putting off potential partners for TelOne while attracting higher costs of borrowing and resultantly putting the entity in a net liability position.
Among the legacy debt ridden parastatals, Mandiwanzira said only TelOne had presented and demonstrated the ability to redeem its debt in the future. He added that government was not going to automatically rescue all parastatals from their debts without justifiable cause.
“The issue of getting legacy debts warehoused is an issue of saying we need to be freed of this debt for the time being. So we re-organise ourselves and make the business successful at some point and we come come back and pay that debt,” Mandiwanzira said. “We need to be convinced that there is a robust business plan for that to happen.”
He said TelOne is the only parastatal that has given government a credible plan that ensures that its debt can be warehoused and at some point be relinquished.
Mandiwanzira said government cannot be assisting parastatals which have no plan or clue as to how to organise themselves and eventually repay the warehoused debt. Government has shown determination to turnaround the fortunes of parastatals, especially those that have immediate impact in resuscitating the economy.
However, the hunt for investors or technical partners for some of the targeted parastatals has continued at a snail’s pace given that the companies are saddled with huge debts amounting to more than US$1 billion.
Among other highly indebted parastatals is the Civil Aviation Authority of Zimbabwe (Caaz) which last year indicated that it is pinning its hope on the warehousing programme .
The National Social Security Authority (Nssa) will in this quarter finalise a transaction that will see it injecting US$18 million into the revival of the Cold Storage Company (CSC), thereby acquiring 80% stake in the entity while government remains with 20%.–theindepent