Zimbabwe Thursday announced it was shelving the privat isation of the country’s huge iron and steel company, in what is suspected to be a growing bickering in Zimbabwe’s coalition governmen t.
Arcelor Mittal, the world’s biggest iron and steel company, and India’s Jindal S teel and Power company, had been short-listed to buy a controlling stake in the loss-making Zimbabwe Iron and Steel Company (Zisco).
The privatisation, announced last year, was meant to turn around the huge iron a nd steel company, which has been idle for years, and kick-start massive sell-offs of state-owned companies in Zimbabwe to raise funds to bridge a US$810 million budget deficit this year.
But the government, in a shock announcement Thursday, said Zisco’s sale was not in the national interest, and that the short-listed bidders represented an unspecified danger to the country.
The announcement caught the two short-listed companies, and foreign investors at large, by surprise, and analysts attributed it to growing bickering in the coalition government ahead of a possible general election next year.
President Robert Mugabe and Prime Minister Morgan Tsvangirai, the main partners in the coalition government, have bickered over a range of issues, particularly economic policy, since agreeing to work together last year.
”The recommendations made by the technical team on the bidders who put up bids were not accepted by the presidency,” Industry Minister Welshman Ncube said, referring to Mugabe and Tsvangirai. He did not elaborate.
Zisco, which has the capacity to produce one million tonnes of steel per year, h as been idle for years, saddled by debts of more than US$300 million and lack of working capital.
The government put the company up for sale last year to revive it and raise fund s for the budget. Following Zisco’s placement for sale, the authorities also inv i ted bids for two state-owned telephone companies.
But the sell-off of both Zisco and the two telephone companies, as well as the e ntire privatisation programme, now appears to hang in the balance as the country heads for fresh elections.