Gono vs Gata

Shakeman Mugari

THE raging war over tariffs between the Reserve Bank of Zimbabwe and Zesa escalated this week amid revelations that a showdown now looms between RBZ governor Gideon Gono and Zesa Holdings chairman Sidney Gata.

Angry correspondence has bee

n flying back and forth between the power stakeholders.

The confrontation comes three weeks after Gono overruled Energy and Power Development  minister Mike Nyambuya’s cabinet proposal for a tariff hike of 2 280% this year.

Gono tore Nyambuya’s proposal to pieces and accused Zesa of wanting to make consumers pay for its incompetence and self-inflicted overheads.

He said Zesa had through Nyambuya misrepresented facts and omitted some of its critical shortcomings to justify the hike to the cabinet and President Mugabe.

The governor said an increase would scuttle the national fight against inflation and lead to company closures — developments he said would sabotage the turnaround programme. 

Sources say Nyambuya is livid that Gono managed to get cabinet to throw out a proposal he had worked on for six months.

Indications are however that Nyambuya, although not happy that he has been overruled, seemed to have softened his initial hardline stance.

He has since given interviews to papers suggesting he is playing to Gono’s tune.

Nyambuya told cabinet on March 2 that Zesa needed an urgent 560% increase to survive.
He said Zesa would need further quarterly tariff hikes to bring the total increase this year to 2 280%.
He however told the Manica Post that such an increase would militate against the war on inflation — exactly the same reason Gono used to overrule him.

“Mind you, electricity is a strategic national resource that is used by many companies and households and for Zesa to effect a massive tariff hike at once will cause inflation,” Nyambuya said.

But although Gono seemed to have won the battle three weeks ago after convincing cabinet to throw out Nyambuya’s proposals,  there are strong indications that the war is far from over.

While Nyambuya is silent about Gono’s actions, Gata seems to have jumped into the fray by taking up the matter up with the presidium through a scathing attack on the governor.

On Tuesday Gata submitted a report to Vice-President Joice Mujuru accusing Gono of making ill-informed allegations and misrepresenting facts to Mugabe and cabinet.

The report — a response to Gono’s damning memo to cabinet dated February 28 — rubbishes the governor’s plea that a hike would scuttle his inflation targets.
Gata shot down Gono’s attempts to cite inflation as the main reason for his rejection saying he had failed to manage inflation even without previous tariff increases.

“The RBZ’s inflation targets were, after all, not met, nor its exchange rate targets, as well as its interest rate targets, all of which have had a very detrimental impact on Zesa’s operations and finances,” Gata said. 

Gata denied Gono’s allegations to cabinet that while whining about exchange rate depreciation to justify the hike,

Zesa had not paid a “single penny” on the US$32,2 million (or $3,2 trillion) the RBZ has sourced for its power imports.

Said Gono: “Omission of this fundamental reality left out a critical piece of information which, in our considered opinion was imperative to accurately guide cabinet.”

Gata however dismissed the assertions accusing Gono of “mis-reporting” and inflating the figures.

He said the amount which Gono has reported as $3,2 trillion was actually $1,8 trillion.
“This amount is scheduled as a debt to be repaid to the RBZ, with interest, once cost reflective tariffs are in place, and not to be treated as some form of a support grant from the RBZ, as erroneously implied in its submission,” Gata said. 

He accused the central bank of reneging on its promise to give Zesa foreign currency to rehabilitate its power stations.

Gono, Gata said, had failed to deliver on both promises for Plarp funds and foreign currency.

Gono had earlier pledged to give Zesa $1 trillion under Plarp funds but has so far managed to release $301 billion  which Gata said had not been timely disbursed.

He attacked Gono for sinking Zesa into debt while at the same time blocking tariff increases essential for its efficient operations.

Gono has blocked tariff reviews for the past three years arguing that such a move would endanger his war on inflation.

He said the utility’s debt situation worsened from 2004 when Gono started blocking tariff reviews.

“The three-year tariff freeze has in turn forced Zesa to fund working capital through costly debt instruments such as bills, bonds and Plarp (which is also an interest bearing loan), etc. Evidently, this has strained Zesa’s debt portfolio.”

Gata further lashed out at the RBZ for trying to interfere with Zesa’s operations adding that the central bank is doing so despite its clear technical inadequacies to run a power utility.

“It would be difficult to develop, retain and justify the requisite expertise within itself to undertake operational functions of the Zesa board and regulatory functions of the Zerc.” 

Gono is expected to respond next week after cabinet deliberations on Gata’s submissions.

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