The Sunday News
Dumisani Nsingo, Senior Business Reporter
KUSILE Rural District Council (KRDC) in Lupane has written a letter to the Government seeking the Ministry of Mines and Mining Development to shelve an outstanding debt of about $16 million in ground rental owed to it by a local firm, Discovery Investments to pave the way for the extraction of coal bed methane gas.
KRDC chief executive officer Mr Christopher Chuma said the delay in harnessing of methane gas at Mzola and Dandanda communal areas was hampering economic development in Lupane District.
“The failure of the methane project to take off is seriously affecting the district’s economic growth. As the local authority we stand to benefit through charging unit tax but with further beneficiation and value addition of the resource numerous petroleum products as well as fertilisers can be obtained thus there will be downstream industries and vast employment opportunities. We already have plans to lure the investor to set up a beneficiation factory in Jotsholo,” he said.
Mr Chuma said the holder of the Special Grant, Discovery Investment has over the last few years failed to attract an investor to inject capital into its project, largely due the country’s Indigenisation and Empowerment Policy, which was despised by most foreign investors.
Amendments to the Indigenisation and Economic Empowerment Act were gazetted on 14 March 2018 to pave the way for foreign investors wishing to establish operations in the country and boost the economy.
“Of course over the past years the company was failing to lure investors due to the Indigenisation law but now with its repealing, a number of potential investors have shown interest to partner the company but are met by a huge debt the company has to the Ministry of Mines and Mining Development,” said Mr Chuma.
He said the company owes the ministry about $16 million in unpaid ground rental fee accumulated over the years.
“The challenge which the company has is that it owes about $16 million to the Ministry of Mines despite the fact that it hasn’t started operating. Once it finds an investor it can’t hide that debt culminating in the investor shying away before an agreement came be reached.
“Thus as a council we have made a request to Government to give the company a reprieve because this huge debt tends to repeal potential investors. We are therefore asking Government to put aside the $16 million and allow the company to come up with a payment plan,” said Mr Chuma.
Discovery Investments’ 100 000 hectare concession is situated at Mzola and Dandanda communal areas.
The company was issued with an Environmental Impact Assessment certificate by the Environmental Management Agency in 2015 to start setting up its infrastructure in preparation to start harnessing the methane gas at its concession. The gas has an estimated lifespan of about 50 years.
Discovery Investments managing director Mr Lloyd Thabani Hove confirmed that the company owed the ministry $16 million in ground rental fees.
“We owe the ministry $16 million but suffice to say there’s no country in the world besides Zimbabwe that charges ground rental before actual production. We have spent millions of dollars doing exploration and no one else in the country has done exploration except us,” he said.
Methane is a colourless, odourless gas with a wide distribution in nature. It is the principal component of natural gas, a mixture containing about 75 percent methane, 15 percent ethane, and five percent other hydrocarbons, such as propane and butane.