State assessors have drastically reduced the estimated value of Billy Rautenbach's
Businessman Billy Rautenbach’s ethanol project is in trouble after the government downgraded the value of his investment from his stated $600-million to just $60-million.
The project has been dogged by controversies since 2009, first as a result of the secrecy that surrounded the partnership of Rautenbach’s company Green Fuels with the state-run Agriculture Rural Development Authority, on whose estates some of the sugar cane is being grown.
Zimbabwe imposed the mandatory blending with ethanol of all fuel last year, granting Green Fuels the sole licence to sell ethanol in the country.
The project was initially set up as a build-operate-and-transfer initiative, but the Cabinet later resolved that it be converted into a joint venture. After that, what remained was its valuation.
The government said it owned 10% of the project, but the breakdown of the ownership of the other 90% is not known, with the state planning to increase its ownership to 51% in line with the country’s indigenisation laws.
Energy and Power Development Minister Dzikamayi Mavhaire said he had asked Rautenbach about the value of his investment, and the businessman said it was worth nearly $150-million, but he intended to raise it to $600-million.
"[That amount] $600-million is for the completed project, but it’s not complete yet. We then sent our people to assess it and they valued it as $60-million,"” Mavhaire said.
The minister could not be drawn on what would happen with regard to the discrepancies as the government gears up to increase its stake to 51%, referring all questions to Indigenisation Minister Francis Nhema, who could not be reached immediately.
Rautenbach last year told a Cabinet committee headed by former Deputy Prime Minister Arthur Mutambara that his investment was worth $600-million. The committee was established to probe the venture.
Debated in Parliament
The Green Fuels project has been under debate in Parliament for the past two weeks, with the Zanu-PF MP for Hurungwe West, Themba Mliswa, questioning why Green Fuels was granted a licence for mandatory blending when the Mutambara committee had said that should have been the case only if it surrendered a 51% shareholding to the government.
Mliswa also told legislators during the parliamentary debate that former Prime Minister Morgan Tsvangirai had fired Energy Minister Elias Mudzuri and replaced him with Elton Mangoma in a mini Cabinet reshuffle in 2011, as the former had been involved in corrupt practices in connection with the Green Fuels issue.
"Let me pay homage to the former prime minister, Mr Morgan Tsvangirai. When his own minister, the honourable Mudzuri, sitting here, was allegedly involved in corrupt tendencies, he was fired," said Mliswa.
“This was after the honourable Mudzuri had gone to Brazil on a trip which was funded by the owner, Billy Rautenbach. On his return, he had no job. I must compliment the former prime minister for that. Equally, the former minister of energy, [Elton] Mangoma, was then given the job to look into energy.”
But in a separate interview on Wednesday, Mudzuri said he did not remember who had paid for the Brazil trip, as he was invited by Agriculture Minister Joseph Made to join a government mission to study Brazilian ethanol projects.
'I am not corrupt'
The former energy minister said that the project was granted national project status when he was no longer minister, and said that the reason for him losing his ministerial post could best be answered by Tsvangirai.
"I am not corrupt. If I am, I must be arrested. Mliswa was misplaced in his speech. He is more of a fraud than me. You leave people who are corrupt and target me when I have done nothing wrong," said Mudzuri.
After completing its work, Mutambara’s committee last year resolved that the government should also investigate Rautenbach’s claim that he had invested $600-million in the project.
"In doing the due diligence and investment/project valuation for the build-operate-and-transfer conversion to a joint venture, there is need for rigour and creativity.
"The veracity of the claim that $600-million has been invested must be established, including the source of the financing," read part of Mutambara’s report.
"There must be robust and creative valuation of the state’s asset contributions to the project, such as the land [40 000 hectares], equipment, intellectual property, institutional memory, other state assets usable as security for loans, the partnership with the government as an asset, and value-enhancing instruments such as mandatory blending."
Rautenbach is fighting battles on many fronts to keep the project afloat.
A Harare man, Tabani Mpofu, approached the Constitutional Court in January arguing that mandatory blending violated his freedom of choice enshrined in the country’s Constitution.
The government is opposing the case, arguing that mandatory blending is in the national interest and is motivated by the need to reduce the fuel import bill.
There are also grievances from surrounding communities in Chisumbanje, who were displaced by the project. Some of the grievances were captured in Mutambara’s report.
According to that report, there are a few individuals who were victims of violence, contaminated water and unsafe working conditions that needed to be compensated. Thousands need to be resettled, and locals have complained that they are mostly being overlooked in terms of employment.