Sinosure debt stalls Chinese funding

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Pay off debts

Business Writers
The implementation of multi-billion dollar energy and telecommunications deals in Zimbabwe is under threat due to delays in the repayment of a $60 million debt to China Export and Credit Insurance Corporation (Sinosure) by Government, Business Weekly has established.

Sinosure is a State-funded insurance group spearheading China’s foreign trade and economic programmes.

The debt has also delayed China Sunlight Energy’s Gwayi Coal-Electricity Integration thermal power generation plant to be situated in Zimbabwe’s south-western Matabeleland Province.

The 660 megawatt Makomo Resources thermal power plant project has also stalled due to the outstanding payments. “As a company, we have done all we can to implement the project but Zimbabwe has some outstanding obligations with Sinosure and that is the major hold up,” said the source.

The energy projects – seen as key to the economic development of Zimbabwe – are part of $9 billion landmark deals signed by President Robert Mugabe and Chinese President Xi Jinping in 2014 to help fund projects in energy, roads, railway, telecommunications, agriculture and tourism.

However, there are indications Government is mobilising funds to settle the debt, currently frustrating critical projects, including the expansion of Hwange 7 and 8 thermal power stations worth $1.1 billion.

The energy projects, largely seen as key to the economic development of Zimbabwe, are part of the landmark deals signed by President Robert Mugabe and his Chinese counterpart President Xi Jinping.

Energy and Power Development Permanent Secretary Partson Mbiriri recently said the non-payment of Sinosure arrears are hindering progress on deals with the Asian giant.
“Such payments are made by the Ministry of Finance and Economic Development and they do not relate to one sector alone. But the challenge remains,” said Mr Mbiriri.

Ministry of Finance and Economic Development Permanent Secretary Willard Manungo, also said Zimbabwe need to repay its obligations to Sinosure.

He said China insures all loans and China-Exim Bank calls on the insurer, Sino-sure, in the event of default.

“Sinosure is also holding some funds over various arrears that we owe. The Sinosure debt is big. It’s not only Sinosure that we owe. What happens with facilities from China is that if you default on one it affects everything.

“Sinosure is on the commercial window and then there is the concessional window, so if one window is affected it affects everything,” Manungo added.

Despite efforts by Government to settle the debts, companies whose projects are currently under threat due to lack of funding told this publication that settling of the Sinosure debt must be prioritised, in the same manner as Government treated the country’s debt and arrears clearance with the International Monetary Fund.

Government last year cleared its $108 million arrears with the IMF after 15 years. While the Zimbabwean Government is still working on its debt clearance strategy, the Sinosure debt is swelling due to interests and penalties.

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