Air Zimbabwe demands outstanding TBs to purchase an Embraer aircraft

 Air Zimbabwe demands outstanding TBs to purchase an Embraer aircraft
Published: 14 June 2019
Air Zimbabwe has engaged the Treasury and the Reserve Bank of Zimbabwe for the release of outstanding Treasury Bills (TBs) amounting to US$4 million for the purchase of an Embraer aircraft.

Government had earlier undertaken to issue out TBs worth US$6 million for the purchase of two Embraer aircraft.

But only US$2 million worth of the TBs were released.

The airline has since acquired an Embraer for US$1,8 million. But that particular aircraft is yet to start operating as know-your-customer (KYC) requirements with Embraer Brazil are still in the process of being filed.

The technically insolvent national airliner - with negative capital of over US$250 million - was placed under reconstruction last October, with Reggie Saruchera of Grant Thornton and Camelsa appointed as the administer.

The administrator earlier this week said the airline had approached both Treasury and the central bank to unlock the money.

"We are in discussions with the Ministry of Finance (and Economic development) and the RBZ governor's office to try and ensure that these TBs are released.

"We have been told that these TBs are actually at the RBZ so went to the governor to say can we have our TBs, but then they had to write a letter to the Ministry of Finance to get the authority to release them," said Saruchera.

"We are actually chasing up to ensure that the TBs are released. If they are released, we can capacitate the airline in terms of getting another Embraer to cover the domestic and regional routes."

TBs are negotiable instruments issued by Government through the central bank to finance the State's short-term requirements.

Last year Treasury placed a moratorium on the issuance of TBs after the quantum of the paper had reached unsustainable highs of US$5,5 billion.

Finance and Economic Development Minister Mthuli Ncube has said TBs issuance is expected to commence in the fourth quarter of this year when the proposed Treasury Bill Auction System becomes operational.

But the request by Air Zimbabwe could see more TBs issued onto the market before the proposed date .

The Government has already issued $180 million worth of paper in the first quarter of this year, with authorities claiming that this was only on a "test basis".

Calls for forex allocation
Meanwhile, the airline has said it is currently lobbying for a 1,5 percent foreign currency allocation from the tourism and industry sectors.

"A national airline is meant to facilitate commerce and trade. In this respect, we are lobbying for a 1,5 percent foreign currency allocation for the airline coming out of trade and industry, as well as what is generated from tourism.

"We strongly believe that the national airline plays a significant role in enabling business and tourism to happen in the country," said assistant administrator Tonderayi Mukubvu.

Saruchera said they have the local currency funds to pay for such an allocation if it is approved.

"And this foreign currency allocation is not a donation. It will be paid for by the airline. We are simply saying if we have our money (RTGS$) we should be able to go to Treasury and say the US$1,5 million that we need in foreign currency we pay for it," he added.

"We have recovered our RTGS$ going to Bulawayo and Vic Falls. We now have the money. Give us the ability when we come, to say there is an allocation of US$1,5 million, come and pay for it so that you can purchase your spare parts."

As at 4 October 2018 - around the time the national airline was placed under reconstruction - Air Zimbabwe's total liabilities exceeded total assets by US$253,4 million.
- eBusiness Weekly
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