The Eastern Cape government announced that more than R50 million will be ploughed into the troubled Magwa and Majola Tea Estates in the former Transkei.
Bhisho announced a business rescue plan to make them financially viable.
Rural Development MEC, Mlibo Qoboshiyane, said they would be recruiting a business rescue practitioner, in another bid to turn the two government projects around.
Provincial Director General, Marion Mbina-Mthembu will be leading the provincial steering committee made up of senior officials from the Department of Rural Development and Agrarian Reform,Eastern Cape Development Corporation,Eastern Cape Rural Finance Corporation and Provincial Treasury and Department of Development Environmental Affairs and Tourism.
Qoboshiyane explained to Algoafm News why Government decided to form the Rescue Plan
"One is to ensure that the business rescue package that we are now mooting and having agreed that with workers that this is the only route that we are suppose to take.I am sure on issues of poor governance,issues of inadequate funding and the plans to diversify operations including the issue of high cost of labour versus the revenue income that are realised out of we doing in these tea operations is becoming much more crucial" he said.
Qoboshiyane said more than R51m has been allocated for business rescue processes at both tea estates for settling outstanding debts,while the bulk of the money some will be used for operational costs at both tea plantations which are situated at Lusikisiki and Port St Johns respectively.
The break down of money allocation for both tea estates:
R3 058 000 (Magwa: R2 038 667. Majola: R1 019 333) for business Rescue process at both tea estates.
R44 302 539 (Magwa: R30 359 700. Majola: R13 942 839) for operational costs in both tea estates.
R4 279 726 (Magwa: R1 852 160. Majola: R2 427 566) for paying Creditors (mainly SARS), excluding salaries in arrears.
He added, that the estimated funding presented above does not include Capital expenditure, salaries in arrears and liabilities of both tea estates.
The funding made available by government in this financial year is R17 m . The balance of the required funding will be made in the next financial year to continue with the business rescue process.
He said projects such as these were a major boost for the Province.
"The Province of the Eastern Cape said because we have got an interest ,people are working, that particular programme can unlock huge employment opportunities and development of the Eastern Cape.We therefore have an interest for development,we want to also see that the issues of liabilities are consolidated together and we as government can be as part of this rescue" he said.
Qoboshiyane added that government will engage with workers on the real dynamics of Magwa and Majola tea estates. He added that reality of the situation was that both estates are currently not profitable and are insolvent.
Government will engage the Chief State Law adviser to prepare and file court papers for the appointment of the business rescue practitioner to manage both tea estates.
He said the court papers are expected to finalised soon.
