HomeNewsMultimedia: New law delays Zesa unbundling

Multimedia: New law delays Zesa unbundling

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DELAYS in enacting law that gives effect to the restructuring exercise of the country’s State-owned power utility has become the only factor affecting completion of the privatisation of Zesa Holdings amid indications that all preparatory work has been completed, the company has announced.

Report by Victoria Mtomba

In a letter addressed to Zesa staff members seen by this paper, Zesa Holdings group chief executive officer Josh Chifamba said a substantial amount of preparatory work had already been completed.

“We hope to have completed the exercise by the second quarter of 2013 . . . More importantly, the necessary approvals — save for the enactment of the legislation — have now been obtained. In view of this, it is the board prudent’s view that staff redeployment into existing departments will be initiated immediately ahead of
actual establishment of companies,” reads the memo in part.

Under the current structure, Zimbabwe Electricity Transmission and Distribution Company (ZETDC), Zimbabwe Power Company (ZPC), Zesa Enterprises (Zent) and PowerTel report to the holding company that makes the overall decisions for the subsidiaries.

The new structure will result in a new company, the National Grid Services Company (NGSC).

He said a separate distribution business, Zimbabwe Electricity Distribution Company, would be formed from the unbundling of ZETDC.

Zesa Holdings, according to the restructuring blueprint, will be unbundled into commercial units which include ZPC, ZETDC, PowerTel and Zent, which will all report to the Ministry of Energy and Power Development.

According to a government action plan for 2013, reforms in the energy sector should be completed by year end. Indications are, however, that the new piece of legislation can only be crafted after a new Parliament is sworn in. The current august House dissolves on June 29, paving way for the next general elections which will mark the end of the inclusive government formed in 2009.

Chifamba, according to the internal correspondence, said the reform programme would result in the creation of a vibrant electricity market that would send clear investment signals to market participants. The loss-making power utility has so far implemented several measures to widen its revenue base as well as control the demand side of electricity.

“A vibrant electricity market will also create incentive for efficient utilisation of electricity, among other benefits. In addition, restructuring is going to facilitate the transfer of legacy debt to NGSC and this will help clear the debt from company’s balance sheets, creating opportunity for new borrowings to finance much-needed investment in the sector. This move is also a necessary step to facilitate privatisation of some segments of the industry value chain should government policy favour that route in the future,” Chifamba said.

Meanwhile, the Zimbabwe Energy Workers’ Union has called for a meeting with management to discuss issues that have to do with the restructuring.

“We hereby write to you as a stakeholder and representatives of your employees that you need to engage the concerned employees in tandem with the provisions of the Labour Act, Chapter 28:01. Section 2A provides for the advancement of social justice and democracy in the workplace by the promotion of participation by employees in decisions affecting their interests in the workplace,” Zewu said in a statement.

This would be the third time that Zesa Holdings would be restructured after it was unbundled in 1997 and in 2006. Zesa Holdings permanent staff complement of 6 492 and 2 022 contract employees. The utility’s head office has a staff compliment of over 100 people and indications are that the employees could be reassigned.

Click here for the interview with Newsday Business Reporter Victoria Mtomba

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