THE Zimbabwe National Water Authority (Zinwa) wrote off debts amounting to US$55 million owed by farmers and local authorities in August resulting in the water authority failing to pay its workers September and October salaries.
Zinwa was owed US$100 million by local authorities, and through the cancellation, it joined power utility Zesa (US$170 million), state telecommunication company TelOne (US$80 million) and local authorities which cancelled debts totaling over US$2 billion after the July 31 elections.
Farmers were major beneficiaries of the cancellations, with Zesa writing off US$80 million of their debts.
However, Zinwa did not cancel debts owed by corporates, government institutions and mining companies.
Zinwa finance director Honest Murindagomo said they were facing serious financial problems after the debt write-off.
“The debt write-off had a severe knock on our cash flow and we are working towards a turnaround in the short-term,” Murindagomo said.
Money owed by commercial farmers formed the bulk of the debts.
“Farmers owed us considerable amounts of money, particularly those who were involved in irrigation farming, but we hope that now they will start from a clean slate and service their debts,” he said.
President Robert Mugabe and his Zanu PF party used the debt cancellations as an elections campaign tool. Local Government minister Ignatius Chombo issued the directive ordering 92 councils to write off debts at the height of the elections campaign in July.
After implementing the directive, Harare lost over US$166 million, followed by Bulawayo which cancelled debts of US$46 million, Masvingo (US$6,7 million) and Masvingo Rural District Council (US$4,8 million).
Since the cancellations, local authorities such as Gwanda, Mutare, Gweru and Chitungwiza are struggling to pay wages on time. The councils are also battling to acquire water treatment chemicals.
Gweru has started paying its workers their September salaries in batches, starting with the lower grades. It needs US$566 000 a month to pay more than 1 000 employees.
While other utilities are facing acute cash flow problems since the cancellations, Zesa seems to have found a way around the problem by accelerating the installation of prepaid meters to about 300 000 households, which is expected to improve its balance sheet.
After completing its first phase, it will move to install the meters at all households nationwide.
However, government wants even more debts to be cancelled. Vice-President Joice Mujuru last weekend said banks should offer farmers a moratorium on debts contracted in previous agricultural seasons so they can access fresh loans.