eBusiness Weekly
As Government presses ahead with efforts to restructure State Enterprises and Parastatals (SEPs) as part of deliberate efforts to increase their operational efficiency, the private sector says it is critical to expedite the exercise in the electricity sector.
The energy sector, which is dominated by Zesa, a State-owned power utility, is facing a myriad of challenges resulting in low electricity generation.
Government is concerned by the poor performance of SEPs and has come up with the Public Entities Corporate Governance Bill to try and stem the excesses of management, which has largely been blamed for running down the firms.
Among other provisions, the Public Entities Corporate Governance Bill seeks to introduce some consistency in the conditions of service of members of boards of public entities, and will also require members to enter into performance contracts with Government.
It will also limit management and board salaries and allowances while also regulating the conditions of service of chief executive officers and other senior staff members.
Government has indicated that it would “bury” some under-performing SEPs but resurrect those that craft bankable turnaround projects.
The Zimbabwe Energy Council (ZEC), a private energy sector lobby group, says the restructuring of the electricity industry — if implemented in a transparent manner — would revitalise the sector.
ZEC chairman Mr Amiel Matindike says: “We are of the opinion that if this is done transparently and professionally, it will bring a breath of fresh air to the sector.
“New and sustainable jobs will be created. Efficiency will be enhanced in our utilities, new direct foreign investment will flow into the sector.
“We urge the Government to restructure the electricity sector first, before disposing off or commercialisation of utilities. In addition we call for a transparent and clear road map, if there are any utilities to be disposed.”
The country’s power utility, Zesa, is a perennial loss maker, and is actually among six SEPs that are technically insolvent.
Zesa has been consistently making huge losses, including $132,2 million in 2012 and $217 million in 2016.
For the year ended December 2017, Zesa is expecting a staggering loss of $393 million, an indication that everything is going horribly wrong at the company.
Currently, Zesa is understood to be owing employees about $120 million.
The workers have been threatening to down tools over unpaid salaries, and the failure by the firm to fulfil the 2012 collective bargaining agreement.
However, former Zesa CEO Engineer Ben Rafemoyo, who is now Zesa board deputy chairman, recently conceded that the power utility is under-performing but blamed the near obsolete generation and distribution equipment for the poor performance.
Eng Rafemoyo also said the current average tariff of USc9,86 per kilowatt hour is too low, when imported power costs about 14c per kWh.
Zesa is importing up to 350MW of power per month from Eskom of South Africa and Hidroelectrica de Cahora Bassa (HCB) of Mozambique.
It is argued that imports are crucial to augment local generation which is averaging 1200MW per day against a national demand of 1400MW.
The power tariff was last reviewed in 2011.
In the past, the tariff was reviewed annually, and this has remained the practice in other countries.
Eng Rafemoyo said there is need for a huge capital injection of between $4 billion and $8 billion, which would be invested in the generation plant and distribution network.
He believes that most of the network needs rehabilitation, and in some cases, replacement, if the power utility was to return to normal operations.
Currently, the country’s power generation plants — principally thermal stations — are recording fluctuations in electricity generation due to aged equipment.
Small thermal power stations are the hardest hit, with Munyati and Bulawayo not generating anything on Friday last week while Harare was producing 15MW.
In the past, Zesa would get money from the World Bank to refurbish power generation plants but since 1999, it is understood that no funding came through.
This has seen equipment deteriorating with Zesa becoming almost reactive — when there was a breakdown — and not proactive.
Ordinarily, engineers give the bulk of electricity generating equipment up to 25 years to run fairly efficiently, and any attempts to run the machine beyond the manufacture life results in repairs being costly.
