HomeLocal NewsStruggling Zesa owed US$30m

Struggling Zesa owed US$30m


THE country’s power utility Zesa is owed US$30 million by debtors that are billed in foreign currency, and ZW$3,2 billion by debtors that include government and local authorities, a situation which Parliament has warned might end up in the electricity supply authority failing to pay for its imports next year.

The issue was revealed by the Parliamentary Portfolio Committee on Energy in their report presented this week in the National Assembly by Elias Musakwa (Zanu PF, Bikita West) on the Finance Bill to do with the 2021 national budget.

Zesa’s highest debtors are local authorities which owe it ZW$1 billion (about US$12 million), government which owes Zesa ZW$400 million (about US$5 million), and parastatals with another huge ZW$189 million (about US$2,3 million) debt.

“The Energy Committee noted with concern that the amount owed to Zesa by various customers has been increasing and currently stands at ZW$3,2 billion for customers paying in local currency and US$30 million for those billed in foreign currency,” read the committee report.

“The failure to pay by government and local authorities has negative effects on the electricity generation company. The situation is worsened by that Zesa owes various suppliers about US$90 million and this debt needs to be serviced every month, but the current tariffs have no provision for debt servicing.

“The debt was accrued due to delays in effecting tariff changes in line with macroeconomic developments in the country,” they said.

Coupled with the problem of failure by debtors to settle their electricity debts, the committee said the power utility is also seized with problems of vandalism of electricity infrastructure.

“Zesa informed the committee that cases of vandalism have increased in most areas in the country with about 200 cases of theft of electricity infrastructure having been reported during the months of October and November 2020 only. This has affected the provision of transformers for new connections, as the newly acquired transformers will be allocated to areas that would have lost transformers due to vandalism.

“It is therefore recommended that the 2021 budget should provide funding for enhancing security of electricity infrastructure. In addition, there is also need for Zesa, with the assistance of Parliament, to carry out awareness campaigns to educate people on how they can police their areas and to have a sense of ownership for infrastructure in their areas.”

A total of 787 cases of vandalism of electricity infrastructure were said to have been reported in 2020, with most of the cases of theft recorded in the past two months.

The Energy Committee further expressed concern that while transformers can be manufactured locally by Zesa’s subsidiary company called ZENT, sadly Finance minister Mthuli Ncube failed to provide a budget for the production of transformers in 2021.

ZENT is said to be currently in the process of procuring materials for the production of 830 transformers, which Parliament says will go a long way in reducing the backlog to replace the vandalised or old transformers.

The Energy Portfolio Committee report also said the supply of electricity in the country was under threat due to foreign currency shortages for the importation of electricity and other equipment required for maintenance of the power stations.

“During the greater part of 2020, the exchange rate was not stable. Most of the electricity users are paying using local currency. Zesa has also not provided an incentive mechanism to encourage the purchase of electricity in foreign currency. The Energy Committee recommends that Zesa should come up with an incentive tariff structure for customers paying in foreign currency.”

In their recommendations, Parliament urged Ncube to release money on time.

For instance, they said in the past years Treasury has failed to disburse money to the Energy ministry allocated in the budget resulting in companies under the ministry such as Finealt Engineering having been allocated ZW$20 million in the 2020 budget, but the money was never released.

“The Energy Committee noted that Zesa is owed a large amount of money by its customers. This situation undermines the parastatal’s capacity to pay for emergency power supplies, undertake critical maintenance and develop new capacity for both generation and transmission infrastructure.

“It is saddening to note that the government has also contributed to the problems facing Zesa by failing to pay its bills. The Energy Committee therefore recommends that in 2021, the government should take a leadership role by paying up its electricity bill arrears.”

Recent Posts

Stories you will enjoy

Recommended reading