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Paraguayan steelmaker Acepar is up to date on payments to the state and has not been under any pressure from President Nicanor Duarte's administration to pay off its debt, company president Sergio Tasselli told BNamericas.
Tasselli's clarification came after Duarte asked Acepar to pay its total debt of some US$24m from its 1997 privatization.
"Everyone wants to collect a debt, but the government is not pushing the company for that. Acepar is up to date on debt payment in Paraguay, we have a payment scheme that is working well and six more years to pay," Tasselli said.
The administration is seeking a debt restructuring agreement, "but there are no problems with payments. Acepar is in good health and has the funds to pay," he added.
The next payment is due on November 10, 2005.
But there is evidence the company has not invested enough in the plant, according to Nicolás Caballero, general secretary of Acepar's union Sitrasa.
"The machinery is in a dreadful state, they are neither buying supplies to guarantee normal plant operation nor is there a clear sales policy from administration," he said.
Tasselli countered, saying: "Investing in a company that is not ours is somewhat delicate, so the first step is to close the purchase of the company and make the respective investments later on." In other words Acepar's management wants to pay the government what it owes from privatization before embarking on major investments.
But the company recently invested US$6mn in a new furnace and has given the go-ahead for a new ladle furnace.
"Compulsory investments have been completed, blast furnaces have been overhauled and now we are overhauling the oxidation area with the purchase of oxygen and air compressors; priority investments such as equipment upgrade have been carried out," he added.
The company will spend US$4mn to buy the ladle furnace this year and fund regular equipment and facility maintenance expenses.
The company president said that for now management aims to take Acepar to full production capacity.
The 150,000t/y-capacity company produced 120,000t last year, generating revenues of US$12mn. "The forecast for this year is similar," he added.
Another concern of workers is the depletion of company funds through the sale of billets to another Tasselli-owned company at preferential prices, the union leader said. Billets are a semi-finished product.
However, Acepar manufactures billets, pig iron and construction steel and "everything is sold to the highest bidder, whether to the US, Brazil, Argentina or Bolivia. The material is produced to be sold not stored," Tasselli said.
Acepar is on the Paraguay river, 37km from capital Asunción in Villa Hayes department.
The company was privatized in 1997 and is now controlled by an Argentine and Paraguayan business consortium, while workers hold a 33.33% stake.