Emmerson Njanjamangezi, Group Features Editor 
THE government is facing increasing pressure to cover parastatals’ foreign debt obligations and importation of machinery to enhance their viability.
Reserve Bank governor John Mangudya and Finance Minister Mthuli Ncube
This comes as the firms are battling to purchase consumables and other raw materials to remain afloat. In a project funding status schedule to the parliamentary ICT Portfolio Committee seen by The Financial Gazette, fixed network operator TelOne said that it was struggling to keep up with the digital pace due to these issues.
TelOne said it required at least US$237,8 million to complete a raft of digital and network expansion projects. These projects include the Fibre to Home (FTH) phase 1, Wireless to the Premises (WTTP) Phase 1, Bulawayo – Victoria Falls (587 km), Karoi – Sengwa (340km) buried fibre optical backbone, Bulawayo – Metro fibre (150 km) & Kwekwe – Hwange (670 km) backbone link OPGW, Internet Gateway upgrade to 100G capacity and Data Centre Expansion Phase 1.
For all these projects, TelOne says it is yet to secure funding and has turned to the government for support. “Our balance sheet remains unattractive due to the exchange losses arising out of the legacy debts, which makes it difficult for us to access facilities for network expansion,” read part of the funding status schedule.
TelOne inherited legacy debt from predecessor company PTC. The debt has since ballooned to US$432 million. “The ministry of Finance and Economic Development through the debt management office is currently engaging correspondent lenders to get buy-in on warehousing of these loans.”
Faced with limited borrowing options, TelOne has been looking for public private partnerships to fund key projects and has also turned to the RBZ foreign currency auction system. However, the maximum bid value of US$300 000 is insufficient to cater for the fixed network operator’s foreign currency needs.
“We are not awarded the full amount applied for, which poses a huge challenge in settling invoices, resulting in additional interests and penalties. Since the beginning of participation our success rate is 56 percent.
“…we submitted a total of US$11,5 million bids through the FCA floor since its introduction in June last year. Only US$6,3 million has been awarded.
“We therefore request for increased foreign currency allocations on the auction system to US$500 000 per week to capacitate us to fund planned projects.
Apart from TelOne, the government is also under pressure to settle the needs of the national airline, Air Zimbabwe. Air Zimbabwe’s local debt is at $349 million while it owes US$31,5 million to foreign creditors.
The company was placed under reconstruction administration in October 2018 to prevent legal action and attachment of assets. Last week, the airline’s administrator, Grant Thornton, circulated a successful debt settlement agreement with local and foreign creditors.
“Government has agreed to pay US$31,5 million to foreign creditors of AirZim. The money will be paid in instalments because the government did not have the resources to make a once-off payment,” Grant Thornton said in a statement.
Similarly, the Zimbabwe Revenue Authority (Zimra) acting commissioner general Rameck Masaire said the revenue collector was in need of foreign currency resources for the completion of its ICT system upgrade, scanners project and a drones project this year.
Masaire said Zimra asked for US$38 million from the Treasury but was allocated US$4,7 million to cover foreign currency requirements. “For this year, our key priority area is our ICT systems upgrade. We have secured financial resources for the drones project to ensure that our borders are well monitored to plug smuggling.
“However, we are yet to receive funding for the scanners project. We will continue to engage the Treasury over that because we see it as key for quick clearance at borders to avoid congestion,” he said.
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