Court bans councils from levying way leave charges

THE High Court has outlawed local councils from levying “way leave charges” on the Zimbabwe Electricity Supply Authority (Zesa), saving the ailing parastatal millions of dollars.

CHARLES LAITON

The determination followed an application by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a subsidiary of Zesa, seeking a declaration that the charging of way leave charges and recognition fees by all the local authorities in the country is contrary to the law and accordingly null and void.

ZETDC was battling the Zvishavane Town Council, which was seeking to recoup US$15 million from the power utility in unpaid levies. Councils and municipalities levy Zesa for erecting its infrastructure such as power pylons and cables in areas of their jurisdiction as “way levy charges”.

High Court judge Justice Nicholas Mathonsi, however, last week delivered a judgement in favour of the ZETDC, in a matter between the power utility and Zvishavane Town Council.

ZETDC had sued Zvishavane Town Council for payment of $4 646 348, together with interest from June 1, 2016 to date of payment in full and costs of suit in respect of the electricity supplied to council.

But the town council contested the action although it admitted in its plea that the amount claimed by the power utility was indeed owed by it. The council averred however that it was owed by ZETDC a sum of $15 310 916, a sum well above what it owed to the power utility and as such pleaded to set off.

“The defendant (Zvishavane Town Council) then counterclaimed for payment of the sum of $10 664 567 being the balance due in respect of rates and service charges as well as way leave charges after discounting from the total charge of $15 310 916 the sum of $4 646 348,” Justice Mathonsi said.

“Plaintiff (ZETDC) denied owing the defendant all that money, the bulk of which consists of what the defendant has levied as what is called ‘way leave charges’, a term coined by local authorities for a levy on transmission lines and substations belonging to the plaintiff which either pass through or are located in areas under their jurisdiction.”

Justice Mathonsi said he was not satisfied that the requirements of a tax were met by the “way leave levies” that formed the subject of the present case because they were only levied against ZETDC and not the public as a whole.

He also said how the collected levies were being utilised had not been expressed in the pleadings.

“. . . The installation (of equipment including sub-stations and power transmission lines) were done in accordance with a primary distribution licence to construct, operate and maintain a distribution system and facilitate as provided for in section 44 of the Act,” he said.

“It is that licence, permit or authority which was transferred, as it was, to the plaintiff following the unbundling of Zesa in terms of section 70 of the Act. Clearly there is nowhere in the Act where the plaintiff is required to pay for construction, operation and maintenance of the distribution system and facilities.”

The judge further said the entire security of the state lies in the provision of electricity hence that function was statutorily governed, adding ZETDC, as a state-controlled incorporation, has been delegated the mandate to handle that portfolio.

“As I have said, the defendant’s claim is predicated upon that statutory instrument which has been impugned by the plaintiff on the grounds that it is ultra vires the parent Act governing the provision of electricity. When making the statutory instrument, the defendant was clearly exercising delegated legislative authority given to it by Parliament,” he said.

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