Government to settle $150m Sable Chemicals debt

29 Nov, 2015 - 00:11 0 Views
Government to settle $150m Sable Chemicals debt Sable Chemicals Industries Limited.

The Sunday News

Sable Chemicals Industries Limited.

Sable Chemicals Industries Limited.

Munyaradzi Musiiwa, Midlands Correspondent
THE Government has committed itself to settle a $150 million Zesa debt which the power utility is owed by the country’s sole ammonium nitrate manufacturer producer Sable Chemicals Industries Limited.

Speaking during his visit to Sable Chemicals, in Kwekwe on Friday Industry and Commerce Minister Mike Bimha said the ministry has engaged the Ministry of Finance to ensure that the funds were made available. The Government had been failing to meet its obligation of meeting three quarters of the Sable electricity bill resulting in the debt accumulating to close to$ 150 million.

“I am fully aware of Government commitment with respect to the special power tariff that had been in place until recently. I am currently talking to my colleagues in treasury to ensure that those obligations are met,” he said.

Minister Bimha said it was unfortunate that operations of a strategic company like Sable Chemicals which contributes significantly towards the economic development of the country considering that the country’s economy is agrarian based were affected by the acute power shortages.

“As the sole manufacturer of ammonium nitrate in the country, the survival of Sable Chemicals is paramount.

Notwithstanding that recognition, we must also appreciate the fact that the country is going through serious power shortages and some painful decisions had to be made to ameliorate the situation,” he said.

Speaking at the same tour, Sable chief executive officer Mr Jack Murehwa said feasibility study for the pipeline to carry gas from Lupane to Kwekwe was complete while work is going on with partners on concept proving of CBM and gas field development in Lupane.

“What we are now waiting for is the developer for the project. We were informed by Government that an investor was planning to inject $2,1 billion into the Lupane coal bed methane project. Once that happens we want to come up with a take-off arrangement with the investors,” said Mr Murehwa.

The project will require no less than $ 600 million.

“We are pleased to learn from the budget by Finance and Economic Development Minister Patrick Chinamasa that progress in this area has been made and an investor has completed exploration in Dandanda, Lupane and Binga areas and plans to invest the $ 2,1 billion towards setting up gas mines are underway. Through an off-take agreement the new Sable project will become a reality,” said Mr Murehwa.

He said following the discontinuance of the electrolysis based ammonia manufacture facilities on 12 October this year, Sable has produced a new business model that ensures continued production of AN at the Sable factory.

“In the short to medium term, the model will be based on total importation of ammonia. This exactly the model that prevailed at the beginning of the Sable project in 1969 to 1972. This model is going to require increasing the number of tank cars to ensure that it is sustainable. The present moment Sable has 82 tank cars that are rolling and these tankers will increase to 94 by mid-2016. Sable also secured funding to purchase an additional 55 tankers to make them 149 the end of the year,” he said.

CMB is a method for extracting methane from a coal deposit through a process called steam reforming. Methane adsorbed into a solid coal matrix will be released if the coal seam is depressurised and hydrogen will be extracted.

CBM which will generate electricity once commissioned which will be fed in the national grid unlike the current electrolysis plant which was set up in 1972 which has become expensive to run due antiquated machinery.

Sable, at full operating capacity require 115 MW to produce 240 000 tonnes of Ammonium Nitrate Fertiliser per year.

This year, Sable was geared towards producing 100 000 tonnes ahead of the summer cropping season. Sable was in September 2009 forced to suspend operations as it could not pay for the high electricity tariffs charged by Zesa then.

The Government had to intervene and appoint a special Cabinet committee to map the way forward.

Production resumed two months later after an internal arrangement between the Government and Zesa.

At its peak the company’s electrolysis plant used to consume about 12 percent of energy produced by Zesa.

The country has during the past few years been forced to import fertiliser as the local companies were failing to meet demand.

The low yields recorded by farmers over the same period were largely as a result of either shortage of the fertiliser or late delivery of the commodity to farmers.

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