Zesa loses US$642m annually
Tuesday, 14 June 2011 22:47
By Zvamaida Murwira
ZESA Holdings is losing about US$642 million per year due to a poor billing
system and load-shedding as experts call for an immediate end to the power
utility’s monopoly if electricity supply is to improve.
Former Zesa acting chief executive officer Engineer Francis Masawi yesterday
said the power utility was losing almost US$500 million because of
load-shedding and at least US$100 million owing to its billing system.
He said Zesa’s billing system was in shambles.
Eng Masawi – who is now a consultant – said this during a public hearing
conducted by the Parliamentary Portfolio Committee on State Enterprises and
Parastatal management that convened a meeting of stakeholders to get views
on the performance of Zesa Holdings.
The former Zesa boss, who was giving expert analysis to the committee on
behalf of the Zimbabwe National Chamber of Commerce, said there was need to
implement provisions of the Electricity Act that allowed more players in the
sector.
He said Zesa generated 7,267 GiGawatts hours in 2010, which cost US$552
million but it collected US$469 million, making a loss of US$83 million
owing to billing challenges.
Energy demand for the year stood at 13,221 GW, but the power utility had
generated 8,482 GW, leaving energy not served and load-shedded at 5,854 GW.
This resulted in the power company making a loss due to load-shedding at
US$439 million.
The figure translates to a cumulative US$642 million loss.
“These are huge losses, which any normal business would seriously agonise
over,” said Eng Masawi who is director of Energy and Information Logistics
Group, a consultancy firm.
He said the existing transmission grid was a natural monopoly so the
Zimbabwe Electricity Transmission and Distribution Company could remain
Government owned.
New power companies will still have to use the national grid in transmitting
their electricity to their customers, with Zesa charging them a small
commission.
A US$600 million ethanol plant in Chisumbanje, a joint project between the
Government through the Agriculture Rural Development Authority and Green
Fuel Private Limited, will contribute 18,5 Megawatts.
Zesa Holdings and Green Fuel Private Limited have already signed an
agreement to be implemented this month that will seed the bio fuel company
supplying feeding 18,5 Mega-watts into the national grid.
“Bulk energy trading should be taken over by the private sector, retail
supply business must be run by the private sector company so as to make the
sector bankable,” he said.
Eng Masawi called for a national vision guiding both the public and private
sector coupled with policy consistence focusing on wealth creation and not
wealth distribution.
Government broke monopoly in the telecommunications sector, a situation that
has translated into immeasurable benefits to ordinary people as more players
came in.
Other stakeholders slammed Zesa Holdings for high tariffs, excessive load
shedding, corruption by some its employees, failure to conduct proper meter
reading, huge salary structures for senior managers among other shortcomings
resulting in poor performance.
During the hearing chaired by Zvishavane – Runde MP, Cde Larry Mavhima
(Zanu-PF) – councils requested for concessionary tariffs saying they were
running “a special industry” of water pumping and se-wage reticulation.
During the meeting, local autho-rity representatives requested that they get
concessionary electricity tariffs from the power utility for the-ir water
pumping and sewer reticulation work.
Town Clerks’ forum vice chairperson, Mr Winslow Muyambi, ar-gued that they
administered a special industry – that of water pumping and sewer
reticulation that they provided as a social obligation.
“Water and sewer needs a special tariff because these are non-profit making
entities.
“As local authorities we run these special industries 24 hours a day and our
plea is that we have concessionary tariffs,” said Mr Muyambi who is also
Norton chief executive officer.
Several stakeholders who included the Harare Residents Trust, Consumer
Council of Zimbabwe and the Commercial Farmers’ Union took turns to berate
Zesa Holdings for untenable tariffs that they said were not consistent with
what people were earning.
They accused some Zesa Holdings employees of corruption saying consumers
were asked to pay bribes in return for an illegal reconnection if power had
been disconnected for non-payment.
CFU representative, Mr Mark Wil-son, complained that load-shedding by Zesa
was seriously affecting win-ter wheat production.
“Any power cut or interruption will jeopardise yields. We are not afraid to
pay what we have consumed but we are afraid to subside inefficiencies,” he
said.
Other ordinary residents complained that they could not afford electricity
bills owing to the low salaries most people were getting.