THE government is yet to decide whether or not it will renew Seaboard Overseas and Trading Group’s contract to operate Lesotho Flour Mills, five months after the American company applied for the renewal of its contract which expires in December this year.
This was revealed by Finance Minister Moeketsi Majoro in a recent interview with the Lesotho Times.
Seaboard applied for a renewal of its licence in May this year but sources close to the developments have told the Lesotho Times that the government has been stalling because the American company has never declared profits and dividends since it bought a controlling stake in the Lesotho Flour Mills for US$10 million in 1998.
Despite its failure to make profits or declare dividends, Seaboard is seeking a new 10-year contract to continue as the investor in Lesotho Flour Mills.
Speaking to the Lesotho Times recently, Dr Majoro, said that negotiations were still ongoing with Seaboard over the renewal of their licence. He did not provide a timeframe for the conclusion of the negotiations.
“The government is studying its arrangements with Seaboard and other shareholders about Lesotho Flour Mills which is an entity incorporated in Lesotho in 1998,” Dr Majoro said, adding, “The outcome of our discussions and the future of Lesotho Flour Mills will be announced by the government in due course”.
In a previous interview with this publication soon after Seaboard had applied for the renewal of its licence, Dr Majoro said he told Seaboard officials that the government was only interested in a new deal that would guarantee profits.
“In my budget speech I complained about Econet, Avani and Lesotho Flour Mills. But I also indicated that Avani paid a dividend of M7 million. I’m happy to report that there is considerable cooperation with Avani. In fact, since the budget speech our cooperation with these three companies has improved considerably.
“They (companies) can come to my office to negotiate but we have a very clear policy that they are in business for profit and we want to see profit.
“I had a meeting with Lesotho Flour Mills together with the shareholder representatives, namely the finance, agriculture and trade ministers. We explained to Seaboard the simple concept, saying, ‘gentlemen we are in business for profit and if you are in business for charity you are not the partner that we want’.
“The conclusion of our discussions was that the issues that the government side is raising are important and they need to be looked at.
“We are proving leadership to Lesotho Flour Mills and before we discuss a renewal of their contract, the important thing is to reset Lesotho Flour Mills on a business footing where it will make a profit,” Dr Majoro said.
Agriculture minister Mahala Molapo recently weighed in on the Lesotho Flour Mills issue, telling this publication that there were several factors that needed to be considered including its capacity to create a market for local farmers before Seaboard’s contract could be renewed.
“We have been in several meetings with Seaboard about the renewal of their contract and there are factors which need to be considered. Most importantly, Lesotho Flour Mills buys maize and wheat directly from local farmers at international prices and it also employs more than 250 Basotho.
“They (Seaboard) explained that they had not made profits due to the fact that they were competing with foreign brands which had flooded the country. They also explained that they had spent a lot of money to revamp the mill.”
Mr Molapo also aid the government was considering measures that would help protect Lesotho Flour Mills from cheaper imports.
“The government is currently working on regulating maize meal and flour which are imported from outside the country, maybe to increase their tariffs or make stricter conditions for their importation,” Mr Molapo said.
Meanwhile, Dr Majoro also revealed that the government was working on measures to transfer some of its shares in companies to the public through the Maseru Securities Market.
“Government is committed to increasing Basotho’s involvement in the private sector and transferring shares in state-owned enterprises to them is an irreversible priority.
“We are considering passing some of the shares in companies held by the government directly to Basotho through the Maseru Securities Market. We are in the process of crafting such measures and we will announce when this process comes to fruition,” Dr Majoro said.