Legacy debt chokes Zesa

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GOVERNMENT is in talks with creditors to reduce close to $500 million Zesa Holdings legacy debt which is one of the company’s major challenges.

Business Reporter

The debt was accumulated before the unbundling of the company in 2002.

The parastatal has four subsidiaries — Zimbabwe Power Company, Zimbabwe Electricity transmission and Distribution Company, Zesa Enterprises and Powertel Communications.

Speaking before the Parliamentary Portfolio Committee on State Enterprises and Parastatals last week, Zesa chief executive officer Josh Chifamba said the company had a legacy debt of $500 million from creditors that it is trying to service.

“We have a debt that is under $500 million that we need to honour. We approached government to create a special purpose vehicle or offer a guarantee. The Finance minister Tendai Biti has said he will approach them on our behalf and he is already doing it,” Chifamba said.

Chifamba said the power utility company had so far managed to clear some of its debts that include the $100 million owed to Hydro Cahora Bassa and also part of the $40 million that it owes NamPower.

He said from the Nampower loan, $6,9 million was outstanding.

The power utility expects to pay an additional $20 million to Zambia for the debt that was valued at $70,8 million.

“We have paid $20 million so far and will be paying an additional $20 million to Zambia by the end of March. We hope it will be cleared by March next year,” he said.

Chifamba said the debt had attracted a $115 million interest. The power utility was owed $740 million by customers in the country with Sable Chemicals being among the top debtors. Local authorities owe the power utility $265 milion.

Chifamba said Zesa was facing challenges in accessing long-term finance that is required for the power projects. Zesa is currently rolling out prepaid meters to customers and they expect to reach out to 650 000 customers.

8 COMMENTS

  1. Sh.o.n.a.s long destroyed Zimbabwe when they overwhelmingly voted for the Gukurahundis in 1980 and again in 1985.

    Had they voted 50% ZANU PF and 50% PF ZAPU – things would have never have turned out this way.

    But because of S.h.o.n.a tribalism – they now have to pay a very heavy price. I am surprised they are still continuing along the same tribal path with their Tswangirayi!!

    • Brother Phunyu, the failure of an administration, a company or a community cannot be easily located in the tribal architecture of the leadership. How do you attribute the failure of ZESA to a single tribe? Are you implying that the tribe you so despise cannot produce anything tangible and successful? Anyway lets zero in on the reasons for the tragedy at ZESA. The mentality that ZESA belongs to government and therefore everything from government is for free was a beginning of a vicious cycle there. How was the $500 million debt contracted and where is audit trail of its usage? Is it because the company was charging uneconomic tariffs and was essentially subsidizing industry? Again, if the current CEO can easily articulate the situation, how come for the past 33 years nothing was done to increase the generation capacity? Of course there were his predecessors…what exactly were these highly paid gentlemen doing at Megawatt Building? What were the responsible ministers, permanent secretaries & other technocrats doing? Were they oblivious of the need to invest in infrastructure to keep up with economic growth? So when President embarked on a noble idea of rural electrification, where did technocrats thought the power will come from? These are questions Zimbabweans should ask whoever want to represent them in the forthcoming elections. A way of holding politicians and technocrats accountable to their constituents will naturally result in better performance. Strong institutions of governance will solve this problem NOT a particular tribe, dialect, region, race, creed or any other divisive factor! The future is bright (Mberikwazvo Kunyanya!)

  2. Can these comments be moderated, please, don’t let tribal mongers destroy your paper, it is my favorite source of news but the tribal rhetoric keeps coping up in the comments to the point where I think its encouraged. Other well established news sources around the world guard against such by having moderators. Stop being a platform of hate and be that of change, in the article above we are talking about a way forward for our country’s infrastructure, the preceding comment before mine goes straight into tribalism and not a single thing about ZESA, how???

  3. why not use diamond revenue to clear all debt owed by zesa and build 2 new power stations and then rehabilitate hawange, sanyati and other power stations. that way we will have excess electricity

  4. The debt is going to get even bigger. That is Black rule for you. Zvikwereti zvega zvega. Ma degree aMugabe arikushanda chiyi ipapo?

  5. Thats why things are a problem in this country. lnstead of people offering constructive criticism, they just utter rubbish. In getting tired of zimbos, they all seem to have developed attitude problem.

  6. All Zimbabweans, startinng with government officials (as they are notorious for not paying their bills) should be FORCED onnto the prepaid system. No more free inputs, electricity etc. You get what you pay for. There’s nothing for mahala.

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