Green Fuel project will not be reviewed — Arda
http://www.theindependent.co.zw/
Thursday, 04 August 2011 18:27
Paidamoyo Muzulu
THE ambitious US$600 million 20-year build, operate and transfer Green Fuel
agreement between the Agricultural Rural Development Authority (Arda) and
businessman Billy Rautenbach’s Ratings Investments will not be reviewed.
The Parliamentary Portfolio Committee on Agriculture had called for the
review of the agreement to comply with the country’s indigenisation laws
which state that locals should control at least 51% of all businesses in the
country.
Rautenbach’s company controls 60% of the company while Arda owns the
remainder, according to a memorandum of understanding signed in 2007.
Ratings provided funding and Arda used its land ownership to purchase its
equity.
The Green Fuel project is set to create the biggest ethanol plant in
sub-Saharan Africa with an expected output of over 40 million litres a month
when fully operational. Over 5 000 hactares have been put under sugarcane
production for the project in Chisumbanje. More cane will come from 400
contracted out-growers from the surrounding community.
Rautenbach’s company is scheduled to hand over complete operation of the
joint company to government after 20 years. The 20-year period is to allow
Ratings to recoup its capital outlay in the ambitious project.
Arda chairman Basil Nyabadza said although the present agreement was fraught
with inadequacies, it would only be reviewed when the economic environment
permitted.
“The deal has to be understood from the period it was executed. No one was
willing to invest in the country and the government was only offering land
for its share of equity in the partnership,” said Nyabadza. “No agreement
is perfect and we will review things as the economic environment improves,”
he said.
Nyabadza added that parliament had not indicated which aspects of the deal
needed to be reviewed, thereby leaving the board confused on what changes to
implement.
“Parliament did not tell us which clauses to review. To this day, we are
still waiting to hear which clauses they need reviewed. However, with time,
we will start negotiations with Ratings to increase government’s equity in
the partnership,” Nyabadza said.
The Agriculture Portfolio Committee chairman Moses Jiri told the Zimbabwe
Independent that the House was of the view that the agreement should be
reviewed.
“The agreement is against the indigenisation policy and we hope that Arda
will review it to reflect that policy,” said Jiri. “We intend to call
Agriculture minister Joseph Made before the committee on matters dealing
with this agreement.”
However, Nyabadza feels that Arda was correct on this deal saying: “The
agreement was done in the national interest after the estates were lying
idle for a long time without any investment.”
The Green Fuel project has changed the economic life of Checheche Business
Centre in Chipinge. The growth point has since made representation to Local
Government minister Ignatius Chombo to be upgraded to town status.
The giant ethanol plant will go a long way in saving the country’s resources
by reducing fuel imports. The plant is expected to produce more than 40
million litres of ethanol every month when fully operational.
The Ratings deal, like the Essar/Ziscosteel takeover, proves that the
indigenisation policy is difficult to attain while the country is faced with
a liquidity crunch. Essar recently bought 54% of Ziscosteel.
Ziscosteel had shut down operations and owed over US$240 million to foreign
banks in addition to salary arrears and other outstanding statutory
payments.