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Zesa needs to revisit its cost structures and its modus operandi to ensure a leaner and more efficient outfit

Victoria Ruzvidzo  Business Focus

Day and night, literally, people are mourning about Zesa but to impose a tariff hike because the power utility failed to deal with its human resources issues timeously is asking for too much.

THE Zesa salary saga, in which the conglomerate intends to increase tariffs by 6 percent to meet a three-year outstanding salary bill of $117 million as reported in our paper yesterday, sounds more like a horror movie script and yet it is as real as they come.

Of course, the power utility is widely known for churning out negative stories, with power blackouts, high tariffs, negligence and corruption, among others, being the order of the day in terms of any read on the parastatal but the latest helping is a bit too much.

How can the power utility even justify the increase? In fact, why should the entire nation be forced to pay for its bungling? Come on Zesa, let us be serious. Please don’t do the exact opposite of what the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset) expects from you.

Day and night, literally, people are mourning about Zesa but to impose a tariff hike because the power utility failed to deal with its human resources issues timeously is asking for too much. The proposed hike is the last thing anyone would want to hear given the dwindling disposable incomes many are facing.

We have a situation already in which both domestic and industrial consumers complain of choking electricity bills. Another hike will obviously leave them in a worse position. The power utility is, in fact, owed large sums of money as consumers fail to pay up hence any additional increases are suicidal.

Zimbabwe fares badly on the Ease of Doing Business Index and high utility bills contribute to all this. So it boggles the mind why the power company would want to make it even more difficult for the economy to attract investment, both local and foreign.

Companies such as Sable Chemicals are almost on their knees due to unsustainable electricity bills but Zesa chooses to ignore all this. This is untenable. The increase should not be allowed to see the light of day.

In the story, Zesa says it did not implement the 2012 collective bargaining award on its 7 000 employees because it hoped for a change of fortune in terms of the Justice Ahmed Ebrahim ruling but it has become worse off now. A stitch in time saves nine, they say. However one may want to look at it, Zesa is caught between a rock and a hard place. It has put itself in a tricky situation and it will obviously not be easy to get out of this one.

It will need sober minds to deal with the issue in the most practical manner possible. Indeed, the workers should be paid their dues as awarded but this should not be at the country’s cost. It is an internal Zesa matter that should be resolved internally. Had payments been staggered or other financing schemes sought, Zesa would surely not be laden with the $117 million bill today.

Previously, Zesa was denied a 5 percent increase it proposed last year by the Zimbabwe Energy Regulatory Authority when it proposed that it be awarded one last year.

Any form of justification was resisted by the regulatory authority then, so I do not see how the latest proposal to pay a backdated salary hike will be entertained.

A report carried by this paper last year showed that the tariff request then was meant to enable mobilisation of resources to finance plant and network maintenance backlog and to correct distortions in the current tariff saying the power utility was spending more than it was selling per kilowatt hour.

The proposal was based on a $986 million revenue requirement, which ZETDC said was in line with its 2014 planned expenditure. But it has also been argued that Zesa needs to revisit its cost structures and its modus operandi to ensure a leaner and more efficient outfit that should be able to sell electricity at the right price.

One can simply read that the power utility is failing to read the current economic environment.

At the expense of being too simplistic, the power utility should employ strategies that are in line with consumer demands without necessarily punishing the consumer. Such bodies as the Confederation of Zimbabwe Industries and other industry representatives have made much noise in an endeavour to get the power utility to see reason and adopt more friendly cost structures that will make life more manageable for end users. The worsening load shedding does not help the situation at all. Zesa head of finance Mr Eliab Chikwenhere has admitted that his firm is in a “parlous financial situation” with its liabilities exceeding its assets.

This is obviously a very unhealthy situation that needs to be urgently attended to. When everything is said and done, the power utility must pay its dues but ensure a safe landing that does not affect the entire nation. The ruling of the salary issue summed it up quite well.

“While it is true that public policy dictates that an award which has the effect of driving the employer into solvency 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,” read the ruling.

My brother, Takura Mugaga, head of research at Econometer Global Capital, couldn’t have put it better: “What Zesa wants to do is the height of misplaced priority or insanity in public service management because power is one of the needs for any economy to function.

“You do not tax overburdened and unemployed residents to cater for your company needs. When people pay for electricity, the money should pay for procurement of key equipment such as generators and transformers, not workers.

“The engineer at the helm of Zesa should be worried about restructuring the company. Increasing tariffs is a viable way of increasing the cost of doing business in the country. We do not want another wage bill that will cause power tariffs to rise.

“What they are proposing to do is one way of transferring the cost of electricity to consumers. Zesa should also work on restructuring than try to have workers paid by increasing tariffs. The Minister of Energy (and Power Development) should not allow this happen because it is very dangerous.”

We do commiserate with Zesa but they will have to deal with this one intelligently and effectively. Like I said, soft landing please!

In God I trust.

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