Zesa unbundling forges ahead


HARARE – Plans to unbundle troubled State-owned power utility Zesa Holdings (Zesa) are forging ahead with government establishing a company solely responsible for electricity transmission, the National Grid Services Company (NGSC).

NGSC, 100 percent  government-owned, will inherit Zesa’s ‘legacy’ debt.

Zesa has a debt of about $500 million accrued over the years due to a decade-long economic recession, poor corporate governance and mismanagement — prevalent in most parastatals.

Government recently approved Zesa’s disbanding to create a level playing field for over 15 independent power producers licensed to help bridge the country’s power deficit.

Zesa is struggling to supply ample electricity to both domestic and commercial consumers. Its five power stations are currently producing approximately 1200 megawatts (MW) against national requirements of about 2200 MW.

The utility has said it is failing to pay for power imports and maintain or refurbish its power stations due to increasing consumer bills payment default.

Pearson Mbiriri, Energy ministry’s permanent secretary, yesterday said NGSC — which will focus on power transmission, marketing and systems operations — was ready to begin operations as a separate entity.

“We have registered the company and we are now only waiting for the certificate (of incorporation) and after that we are ready to cruise,” he said at the Zimbabwe Energy Council monthly energy synergies series.

Following the restructuring exercise, private players are expected to take equity in Zimbabwe Power Company (ZPC), responsible for electricity generation, and the Zimbabwe Distribution Company to take charge of electricity distribution.

Mbiriri, however, could not divulge the reasons behind the delay in the restructuring exercise, which was initially targeted to be finalised in the second quarter of this year.

“It’s difficult to give dates to these issues, but we are taking steps to ensure that everything is done within this year,” he said.

The current restructuring plan is the third in recent years following similar endeavours in 1997 and 2002.

Zesa currently has four subsidiaries, namely the Zimbabwe Electricity Transmission and Distribution Company, the Zimbabwe Power Company, investment unit Zesa Enterprises and Internet services provider Powertel Communications.

Energy experts maintain that the unbundling will enable Zimbabwe to effectively undertake investments in the power sector, which it has identified as critical in pushing economic development.

Emmanuel Nzabanita, African Development Bank (AfDB) official noted that the restructuring of national utilities has been a worldwide trend in recent years, with privatisation of State organisations aimed at bringing greater efficiency to the industry.

“Privatisation and restructuring of government-owned power companies has been a feature of almost every country’s governmental policy over the last 10 years,” he said.

Power shortages and irregularities have forced many countries to look to neighbours to supplement their supply, with regional networks and power pools arising as a result.

Power shortages in the region have also brought a number of new projects to the fore, with large multinational power companies establishing a growing presence, particularly as natural gas discoveries have made combined-cycle plants competitive economically.

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