Zesa mulls 6pc tariff increase to cover salary arrears

Felex Share Herald Reporter
Zesa Holdings has said it will have to raise electricity tariffs by six percent to cater for salary arrears amounting to $117 million arising from a gazetted 2012 collective bargaining agreement which management ignored.

The power utility conceded bungling by not honouring the collective bargaining, but is arguing that abiding by the award will result in the payroll shooting by $5,6 million per month, a figure that can only be raised through increasing tariffs.

The arbitrary award, which would have a heavy bearing on electricity consumers, was granted by retired Supreme Court judge Justice Ahmed Ebrahim and Professor Emmanuel Magade.


Zesa Holdings is now offering the workers $21 million spread over four months, arguing that their demands were “unrealistic.”

Instead of paying the collective bargaining award when it was still affordable, the Zesa management for the past three years unsuccessfully contested the result which came out as a result of Statutory Instrument 50 of 2012.

Now, the figure has ballooned and has to be backdated.

The dispute is also likely to cost Zesa another $5 million in tax liabilities, according to calculations by the Ministry of Energy and Power Development.

Zesa head of finance Mr Eliab Chikwenhere said the firm was in a “parlous financial situation” and its liabilities exceeded the assets.

He said in any case, Zesa needed to raise tariffs to meet its obligations.

Responding to the ruling yesterday, a Zesa senior executive said any compliance with the award meant an increase in tariffs.

He said the firm was prepared to part with only $21 million to avoid increasing tariffs and burdening consumers.

“The demands by the workers are unrealistic, but we have come up with a concessionary figure which reflects what the business can pay,” said the senior executive.

“We admit we signed an agreement and we have to comply, but as a gesture of goodwill this is what we can afford. First and foremost, before any considerations, Zesa should be able to generate electricity and that is why we have $21 million as our maximum figure.”

Added the senior executive from Zesa: “Implementing the award will require a six percent tariff increase to meet the $5,6 million additional figure per month of the current payroll. This will burden the already overburdened consumer as well as impacting negatively on service delivery.”

The collective bargaining agreement provided for Zesa to effect a minimum increment of $275 and 12 percent grade differentials, 2,5 percent step (notch) differentials, non-pensionable allowance (30 percent of basic salary), $70 transport allowance and $23 canteen allowance (grade 1 to D2) with effect from January 2012.

In their ruling, Justice Ebrahim and Professor Magade said the power utility should honour the collective bargaining agreement and conduct a re-grading exercise.

They said Zesa should start paying employees according to qualification and seniority.

“The claimants should comply with the National Employment Council salary scales arising from the 2102 CBA,” reads the ruling.

“The claimants should, consequently, conduct a re-grading exercise so that all their employees are placed in their correct grades in the NEC salaries scales, according to each employee’s qualifications, date of entry into service and any other relevant factors, irrespective of the grade such employee currently occupies under the Zesa scales.

“This exercise should be back-dated until the date on which SI 50 of 2012 came into effect and any salaries and benefits should be calculated from that date, and should be completed within six months of the date of this award. Any back-payment should be paid within that period.”

No employee, the ruling stated, should, as a result of the re-grading exercise, receive salary or benefits lower than he or she currently received.

The arbitrators, while acknowledging Zesa was “not fully delivering what it ought to”, said it had created legitimate expectations among the workers and should honour that.

Reads the ruling: “Whilst it is true that public policy dictates that an award which has the effect of driving the employer into insolvency should not be made, it is equally true that where an employer has entered into an agreement with his employees he creates legitimate expectations amongst the workers. Public policy becomes something of an unruly horse which gallops in multiple directions.”

According to the Ministry of Energy and Power Development, the least worker is owed $1 628, while the highest paid (skilled) worker should get about $2 418.

But workers, through the Zimbabwe Energy Workers Union, claim the liabilities to be $5 607 and $37 102, respectively.

The power utility has more than 7 000 workers countrywide.

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