Zimbabwe rejects US$125m loan request from ‘troubled’ Indian businessman

The Reserve Bank of Zimbabwe (RBZ) has denied a US$125 million loan request from NV Distilleries and Breweries, a company led by the controversial Indian businessman Ashok Jain (74).

The company had proposed a large-scale sugarcane ethanol production project in Zimbabwe. The RBZ’s decision raises questions, particularly considering Ashok’s recent legal troubles in India.

News of the loan denial comes after a series of requests from NV Distilleries to the Zimbabwean government for various incentives and financial support. These requests follow on the heels of Ashok’s arrest in India on charges related to an alleged liquor smuggling operation.

Ashok, who suffers from bipolar disorder and anxiety according to court documents and available evidence contained in Indian newspapers, was released on bail in December 2022 for medical reasons.

His legal troubles in India, however, cast a shadow over his business dealings elsewhere.

NV Distilleries had previously approached the RBZ for a US$100 million loan at a subsidised rate in October 2021. Their proposal also included a request for significant government support, including free land, import duty exemptions, and a capital subsidy.

In July 2022, NV Distilleries increased their credit line request to US$125 million, citing a US$165 million line of credit extended by the Indian government to Zimbabwe.

“Reference is made to the attached letter wherein among other issues, we were requesting for the issuance of a standby line of credit (SBLC) for US$100 million in favour of an Indian bank associated with the Government of Zimbabwe at a subsidised rate of interest by any bank in Zimbabwe,” read a letter by Ashok Jain dated July 6, 2022.

“Please note that this letter serves as a follow up to the same request which we are now seeking your indulgence to have it increased to US$125 million. It is our understanding that is line of credit of US$165 million was extended by the Indian Government to the Zimbabwean Government.

“As a background, NV Distilleries and Breweries (Pvt) Ltd signed a contract with ARDA Zimbabwe in March 2022 during the Dubai Expo for growing sugarcane and Installing a sugarcane milling plant to produce sugar and ethanol. A brewery for alcohol and a distillery for whiskey, rum, gin and vodka will also be installed.

“We humbly request your intervention in the finalisation of the matter so that we can earnestly begin our operations in Zimbabwe.”

The RBZ, however, stated they had no knowledge of such an Indian credit line and could not support the issuance of the requested standby letter of credit without such backing.

“Reference is made to your letter dated 6 July 2022 on the above subject matter.

“Please kindly be advised that the Bank is not privy to the US$165 million fine of credit that was extended to the Zimbabwean Government by the Indian Government.

“Under these circumstances, we would like to advise that without such a support, we have no capacity to support the issuance of the required US$125 million Standby Letter of Credit,” read a letter signed by then RBZ governor John Mangudya dated 18 July 2022.

The RBZ’s cautious approach is seemingly based on the lack of confirmation regarding the Indian credit line. Additionally, Ashok Jain’s legal issues in India likely played a role in the bank’s decision.

NV Distilleries had promised to establish a sugarcane plantation, a milling plant for sugar and ethanol production, and a distillery for various alcoholic beverages. The company claimed the project would create over 3,000 jobs and contribute significantly to Zimbabwe’s GDP.

The RBZ’s position highlights their cautious approach to credit issuance, particularly for large projects by foreign companies facing legal challenges in their home countries.

Three years down the line, the company is yet to invest in anything towards the project. Investigations indicate that the NV Distilleries incurred no sunk costs despite proposing the project through Zimbabwe’s presidency.

Nehanda Radio understands that a former cabinet minister and one of President Emmerson Mnangagwa’s current advisers (name withheld) necessitated a meeting between the county’s leader and Ashok, a confirmed “suicidal and mentally disturbed” person.

Meanwhile, authorities are currently investigating an unidentified group claiming to be Indian Army Special Forces that was recently spotted in Zimbabwe’s gold mining and chemicals manufacturing sectors.

Their presence raised concerns as they operated in vehicles marked with their affiliation and seem to have unchecked access within these sensitive areas.

More than 50 individuals are believed to be involved in the exploration of Zimbabwe’s mineral industry for two years while also being involved in military activities elsewhere.

The group’s activities have raised concerns about potential resource exploitation, illegal trade of medicines and arms, and influence peddling involving a former cabinet minister. Their presence is seen as a threat to Zimbabwe’s security, economic stability, and public safety.

Zimbabwe’s immigration department is probing the group’s potential links to corrupt officials.

Nehanda Radio understands that more than 20 Indian nationals were deported last month over inadequate documents and links to smuggling of unauthorised drugs.