The Reserve Bank of Zimbabwe (RBZ) has scuppered an Indian businessman's plans to create a large-scale sugarcane ethanol production plant in Zimbabwe by refusing to issue a letter of credit (L/C) in support of the project.

Indian Distilleries and Breweries (IDB), led by businessman Ashok Jain, said it wanted to tap into a US$165 million line of credit facility extended by the Indian government to the Zimbabwean government. But the RBZ said it had no knowledge of the facility.

Indian plans

According to a letter written by Jain, IDB signed a contract with Zimbabwe's Agricultural and Rural Development Authority in March 2022 to grow sugarcane and install a sugarcane milling plant to produce sugar and ethanol in Zimbabwe.

A brewery for alcohol and a distillery for whiskey, rum, gin and vodka will also be installed, it says in the letter, in which Jain said "it is our understanding that a line of credit of US$165 million was extended by the Indian government to the Zimbabwean government."

Zimbabwe's response

But a letter from RBZ governor, John Mangudya, denies all knowledge of such an Indian credit line, and says that the bank could not support the request without backing.

"Please kindly be advised that the bank is not privy to the US$165 million line 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 L/C," Mangudya concludes in his letter.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.