The state-owned Industrial Development Corporation has lost its shareholding in the Kadoma Chinese Glass Company after it failed to raise $13 million required for the joint venture.
The bankrupt Harare government pledged the amount after insisting it wanted locals to own 51 percent of the joint venture in line with controversial black empowerment laws that have now been discarded after the investment flood of the government of national unity era vanished. The government has now invited any investor with money to take over its shareholding.
The gaping factory shell in the central city of Kadoma has remained uncompleted for years. Known as the Kadoma Chinese Glass Company, the firm’s official name is China Jingniu Glass Factory (Pvt) Limited. It is a joint venture between the Zimbabwe government through IDC and Jingniu Ceramic Company Limited of China.
Deputy minister of industry and commerce Chiratidzo Mabuwa confirmed that government had failed to come up with its 51 percent share of the $25 million project, amounting to $13 million.
“Kadoma Chinese Glass Company, officially referred to as the China Jingniu Glass Factory (Pvt) Limited is a Government approved project. About US$13 million is now required to fully complete the project. The company has cited the shortage of funds as a major constraint to the completion of the construction of the glass factory,” Mabuwa said.
“I am informed that to mitigate this challenge, the parent company, Jingniu Ceramic Company Limited approached China Bank for additional funding to bankroll the project. The company has also approached potential local investors who may want to partner in the business. These efforts have not yet produced the desired results.”
Mabuwa was asked in parliament to explain why the Chinese Glass Company stopped building in Kadoma in 2011 and to state the measures that the government is taking to urge the company to complete the construction.
She confirmed that the parent company had been authorized by the government to take 100 percent ownership of the firm, in violation of indigenization regulations which say locals must own a majority.
“Yes, indeed, in the agreement there was a potential local investor (IDC) and they were coming in, at that time, at the 51/49%. The local investor was not able to financially meet the obligation. So, after the Chinese company had gone in, they now said we are going to look for another investor who they have not been able to find. They went back to the parent company and this is why now, the parent company is coming in at 100%,” the minister said.
© Now Media 2016. All Rights Reserved.