THE Auditor-General (AG)’s latest report has revealed that the Zimbabwe Electricity Transmission and Distribution Company (ZETDC)’s liabilities currently exceed its assets by ZWL$24,5 billion.
The AG’s Office audited ZETDC’s financial statements for the year ended December 31, 2021 and expressed doubt over the Zesa Holdings subsidiary’s “ability to continue as a going concern”.
“The company’s current liabilities exceeded its current assets by ZWL$24,5 billion (2020: ZWL$47,5 billion) as at December 31, 2021. The company defaulted on repayments of its foreign loans which have not been rescheduled.
“These conditions indicate the existence of a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern.”
In evaluating the property, plant and equipment, the report states that valuations were determined in United States dollars and then converted to local currency using the auction rate as at December 31, 2021.
The report states that although the determined US dollar values reflected the fair value of the property, plant and equipment in foreign currency, the converted local currency values were not in compliance with International Financial Reporting Standards 13’s “Fair Value Measurement”.
The report notes that the company incurred an operating loss before tax for the year ended December 31, 2021 of ZWL$816,02 million compared to ZWL$25,9 billion in 2020.
The report also indicates that ZETDC did not have a client payments system that was interfaced with the banks; and, as a result, there were payments amounting to ZWL$793,4 million processed by the bank which were not allocated to the respective customer accounts for which payments were made.
- Low tariffs weigh down ZETDC
- Severe power outages loom: Zesa
- Bodies rot at mortuaries as power cuts worsen
- Gweru debtors’ bill soars to $3bn
The report recommended that management should encourage customers to provide sufficient information when making payments.
ZETDC was also advised to consider coming up with a payment system that can be interfaced with banks.
The audit report noted that the company was not been efficiently remitting the rural electrification levy to the Rural Electrification Fund (REF).
“REF levy outstanding as at December 31, 2021 amounted to ZWL$4,3 billion (2020: ZWL$1,8 billion),” the report read.
The audit report recommended that ZETDC should ensure that rural electrification levy is remitted timely.
“The REF Levy is now being remitted based on collections. When cash flows improve the outstanding balance will be reduced to bring it to current. However, there has been an improvement in the REA [Rural Electrification Agency] levy remittances ie, ZWL$96 million in 2019, ZWL$431 million in 2020 and ZWL$1,9 billion as at December 31, 2021,” the report further read.
The audit report also found out that ZETDC was incurring transmission losses ranging from 1% to 5% above the stipulated limit of 14% on units of electricity sold versus the units of electricity purchased, but there was no evidence to support that management investigated these variances.
ZETDC is struggling to deal with the vandalism of infrastructure and supplying power to consumers to a point whereby in some cases it has asked the consumers to contribute towards restoration of cables and transformers for it to restore power.