HomeBusiness DigestZesa posts $32 trillion loss, blames tariff freeze

Zesa posts $32 trillion loss, blames tariff freeze

ZESA Holdings last year picked up a staggering $32 trillion loss, blamed by the utility on a three-year freeze on tariff increases, a document seen by businessdigest indicated.

The loss followed another one to the tune of $2 trillion by the power utility the previous year,

which came against the backdrop of a $230 billion loss in 2003.

The figures, part of a comprehensive document to President Mugabe and his cabinet responding to harsh allegations of mismanagement at Zesa by the Reserve Bank of Zimbabwe, which prompted a reversal of tariff increases by Mugabe, indicated “the death of a sector” hounded by “a crippling three-year tariff moratorium”, said Zesa.

Zesa recently took flak from RBZ governor Gideon Gono over plans to increase tariffs, which Gono said would spur inflation.

Gono, in a letter to President Mugabe and cabinet, said an analysis of Zesa’s domestic debt had 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 superstructure” swallowing 65% of Zesa’s total revenue through salaries and wages at the holding company.

But Zesa hit back in its reply to Gono addressed to Mugabe and his cabinet, accusing Gono of failing to tackle the inflation scourge and reneging on promises to provide foreign currency.

Zesa recently came to the market to raise $500 billion through 180-day Megawatt Bills, for which it is expected to fork out a hefty $2 trillion to pay back investors.

The interest charge on the bills amount to $1,5 trillion over the 180-day period.  — Staff Writer.

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