In a letter e-mailed to The Namibian, the Hind Group partly blamed this on Government dragging its feet on setting up a Development Bank.

"An investment of N$160 million is being lost to the nation.

Direct employment was proposed at more than 400 personnel.

The upstream and downstream linkages to the industry would have provided thousands of jobs," Executive Director Ashish M Gupta wrote in the letter.

He said the group became interested in Namibia when officials attended a Namibian Government presentation in New Delhi.

"It is well known in the steel industry that a major part of the scrap [metal] that comes to India is from Africa.

Considering all aspects, southern Africa appeared to be a good area to locate a Steel Plant," Gupta said.

He said the board had identified South Africa and Namibia as possible locations for a reprocessing plant.

It had made a presentation to the Namibian Government in August 2000 at which "support" was promised, the Executive Director said.

A feasibility study was then carried out at a cost of N$1 million.

"The study indicated very positive results, at a time when steel [price] was at its lowest in history.

The profitability could only get better and not worse," Gupta said.

In August 2001, the study was presented to "development finance institutions," including the Namibia Development Corporation (NDC).

The NDC, however, was unsure about funding such a large project, and called in the Development Fund of Southern Africa (DBSA) to do a further study, and possibly provide financial assistance.

"It took the DBSA/NDC team more than one year to make an assessment despite a commitment to complete the evaluation in three months," Gupta said.

The study, completed in October 2002, expressed doubts about the scheme's viability, but Gupta said the Hind Group was able to "reply" to all the points.

"Since October 2002 the promoters have been told that the matter would be decided by the proposed Development Bank of Namibia (DBN).

It is now September 2003 and still the Development Bank is nowhere to be seen," the e-mail said.

CS Narula, Chief Executive of Joy's Consulting Services, which represents the Hind Group in Namibia, said all is not lost, but that time is running out.

He plans to meet Trade and Industry Minister Jesaya Nyamu soon to try to resolve the issue.

The Hind group wanted to start the project before the beginning of next year.

Asked about private sector financing, Narula said a major Namibian commercial bank had expressed interest, but would provide funds only if another major lender took part.

WORK IN PROGRESS Permanent Secretary of the Ministry of Finance, Calle Schlettwein, told The Namibian that the Development Bank would, in all probability, be established by April.

The DBN Act was passed by Parliament in August, and a board of directors was appointed by Cabinet in November.

In terms of the Act, the Development Fund of Namibia (DFN) and the Namibia Development Corporation (NDC), which had traditionally funded smaller projects, were to be taken over by the DBN, Schlettwein said.

At the moment, the DFN and NDC were not financing any "major new loans", Schlettwein said.

"We want the the Development Bank to start off with more or less a clean slate, with no large new liabilities which they have not had the chance to examine," he said.

He said potential investors should "have some awareness that we are in a transitional phase".

This, however, was not the time for investors to go elsewhere, Schlettwein said, as the DBN, once established, would be well placed to fund large-scale projects.

David Nuyoma, Executive Director of the Investment Centre, said Government supports the project "in principle ... and look forward to it being established as soon as possible".

"But when it comes to financing, it is a different ball game," he added.

Finance institutions had to go through "due diligence procedures" to make sure an investment would be profitable, he said.

If the DBSA and NDC had questions about the project's viability, the State could not force them to give the funds.

He added: "We cannot talk about whether the Development Bank will fund the project before its creation".

"The Development Bank will still have to go through its own due diligence procedures," he added.

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