More troubles for Arda, Green Fuel deal?
Written by Business Writer
Thursday, 14 June 2012 16:04
HARARE – As agriculture minister Joseph Made has disowned Green Fuel’s
multi-million dollar deal with the Agricultural Rural Development Authority
(Arda), it has emerged that the parastatal could have violated its own
mandate and statutes on agricultural development.
While Authority chairperson Basil Nyabadza claims the closure of the
southeastern Zimbabwe project may jeopardise the company’s entire
operations, inquiries by businessdaily have shown that Arda could have
violated Section 18 of its Act, which govern its land leases.
“State land specified… shall not be granted, sold, leased or otherwise
disposed of to any person other than on the recommendation of the
Authority,” the laws say.
“Where State land specified… has been granted, sold, leased or otherwise
disposed of to the Authority or to any subsidiary company referred to in
Section Twenty, such land shall not be granted, sold, leased or otherwise
disposed of to a third party by the Authority or that company, as the case
may be, without the approval of the Minister and the appropriate Minister,”
added Section 18(5) of the same Act.
On Monday, Made said Cabinet had concluded that the built-operate-transfer
(BOT) arrangements between Arda and Billy Rautenbach’s companies were “null
and void” — meaning the projects were undertaken without government’s
wholesome approval.
However, Green Fuel maintains the Bot agreements were in compliance with the
country’s laws, specifically Section 17 of the Arda Act and done with the
approval of Nyabadza’s board, and senior management at the time.
Under the contentious deals, three companies namely Green Fuel, Macdom and
Ratings Investment are in the business of processing sugarcane, and ethanol,
but President Robert Mugabe’s government is calling for a review of the
agreements.
According to government’s latest demands, the state will now hold a 51
percent share in the project, while 39 percent will go to the investor and
10 percent to the local community.
While the tycoon’s companies are enjoying 20-year leases on land where the
sugarcane is being grown, there are fears or concerns that the partnerships
are heavily tilted in the private investors’ favour and since Green Fuel is
not part of the Bot arrangement, Arda is not benefitting significantly from
the deals.
“The ethanol plant is also built on… land being leased from the Chipinge
Rural District Council, so what benefit will this bring to Arda at the end
of the 20 years? Will the ethanol plant also be transferred to Arda?,” said
an analyst.
“Rating (operating at Arda Middle Sabi Estate) and Macdom (operating at Arda
Chisumbanje) are 100 percent owned by the investor, and Arda is not a
shareholder (in these entities), and neither does it have management and
board representatives. So who then monitors production income for Arda’s
information and who determines the price the cane is bought at?,” they said.
While hundreds of thousands of acres of land are under cultivation and Green
Fuel had produced over 10 million litres of ethanol by January, the company’s
push for mandatory blending are also facing serious resistance due to
concerns that this would be akin to creating a monopoly.
As things stand, Energy minister Elton Mangoma has said the company is free
to export its product.
In recent months, Rautenbach’s company and government have also clashed over
the former’s refusal to provide its cost build-up, and other regulatory
requirements.