Home » Industry » Fears New U.S $18 Million Hwange Loan May Be Looted

The MDC-T Shadow Minister for Energy, Abednico Bhebhe, has dismissed the new $18 million loan for Hwange Colliery saying the fund is a ‘fertile ground for looting’ by executives and politicians.

Bhebhe was reacting to reports which said the troubled parastatal had secured the loan from the regional PTA Bank to recapitalize its operations. The Herald claimed that the fund is a ‘timely boost’ and is expected to ‘reinvigorate’ the struggling coal mining firm.

Board Chairman Farai Mutamangira said the fund will be used to purchase equipment from the Eastern European country of Belarus and that negotiations with the supplier were at an aanced stage, with the order expected in Zimbabwe shortly.

The new loan comes at a time when the company requires $150m to boost its operations and when it owes its employees $19m with the government not willing to adopt the debt. The company is also struggling to repay a $20m loan borrowed from the ABC bank a couple of years ago.

Hwange Colliery has more than 3,000 employees and yet it operates below capacity, producing only 200,000 tonnes of coal annually against a target of 450,000. Last week government blocked a board proposal to retrench half the company staff.

Bhebhe said unless Hwange Colliery privatizes he does not see the fading coal mining giant reviving itself. He said: ‘The Colliery’s fundamental problem is that it is a parastatal and as such its operations are heavily controlled across the board, from day to day operations right up to pricing. As a result they have not been able to replace the equipment which would have helped them to operate competitively.’

The MDC-T MP for Nkayi South said it does not make sense for the company to borrow more money when they are struggling to repay the ABC loan. He said: ‘Common sense will tell you that when a company borrows more money when they are failing to repay what they owe, what it means that the new loan will be pilfered by the executives.’

Bhebhe said claims by the board that the new loan will be used to revive the ailing coal giant should be taken with a pinch of salt because such claims were made about the previous loan. He said instead of that loan being used to revive the company part of it was looted while the other was used to purchase substandard equipment which failed to function.

Hwange Colliery is the country’s largest coal producer with its main component, Hwange Power Station, being one of the major contributors to the national grid.

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Source : SW Radio Africa