CASH-STRAPPED power utility Zesa will have to fork out $2 trillion to pay back investors for Megawatt bills it issued to the market over a fortnight ago.
The 180-day tenor bills, issued on March 29 to raise $500 billion to finance power imp
orts and coal purchases, were slightly oversubscribed.
The interest charge on the bills amounts to $1,5 trillion over the 180-day period.
Market sources said investors had subscribed for the Megawatt bills on the basis of an irrevocable government guarantee after strong fears that Zesa could default.
Zesa said the bills were secured by “a sinking fund managed by Genesis Investment Bank into which ring-fenced revenue streams will be deposited by the issuer”.
Market analysts said the power utility was unlikely to mobilise enough revenue from tariffs to pay investors on maturity, raising the possibility of Zesa coming back on to the market to raise further cash for payment of maturities.
“They are slowly sinking into a dept trap,” a bank economist told businessdigest. “Technically, they’ll default. The burden will fall on government to pay for the bills on maturity.”
Zesa recently took flak from Reserve Bank of Zimbabwe governor Gideon Gono over plans to increase tariffs.
Gono, in a letter to President Robert Mugabe and cabinet, said an analysis of Zesa’s domestic debt revealed “glaring imprudent commitments through short-term Zesa bonds and Megawatt bills, which were largely financing consumptive outlays”.
Gono alleged that Zesa had adopted a “costly super-structure” swallowing 65% of its total revenue through salaries and wages at the holding company.