16 June 2017

Zimbabwe: Zesa Shells U.S.$1,3 Million On Cars

THE Zimbabwe Electricity Supply Authority (Zesa) Holdings has purchased 19 top-of-the-range vehicles for its directors and top managers valued at US$1,3 million at a time the struggling parastatal is retrenching 1 700 workers, failing to pay for power imports and service internal debts.

According to sources at Zesa, four directors will get Toyota Fortuners which cost US$75 000 each while the parastatal also bought five Land Cruiser pick-ups whose value is US$59 000 each. Zesa also bought 10 station wagons valued at US$78 000 each.

The spending spree has shocked workers at the parastatal, given the planned retrenchments and the well-documented financial challenges Zesa is experiencing.

Last month, South African Power utility Eskom issued Zesa Holdings an ultimatum to clear its debt arrears, threatening to cut the 300 megawatts it supplies to Zimbabwe daily. Zesa owes Eskom US$43 million, of which US$8,9 million is in outstanding arrears. It also owes Hydro Cahora Bassa of Mozambique US$40 million.

Energy minister Samuel Undenge last week said US$10 million out of the US$43 million owed to Eskom has been paid to avert potentially crippling power outages in the country.

An acute shortage of foreign currency in the country has been cited as one of the reasons Zesa is struggling to pay for power imports.

"They have bought 19 top-of-the-range vehicles, including Toyota Fortuners for the top executives, 10 station wagons and five Land Cruiser pick-ups which are said to be for projects when they are claiming that the company is financially struggling.

That is just being insensitive to the plight of workers who do not know their fate," said a Zesa source.

A senior Zesa official who spoke on condition of anonymity confirmed the purchases and justified the move, saying "it is above board and, in fact, directors are owed cars".

"There are four directors that are expecting their vehicles and these cars were supposed to have been delivered three years ago as part of their contracts. Last year, the directors were up in arms with management over the false promises over these vehicles. The reasons given the past years in justifying delays in the buying of their vehicles was that Zesa does not have money," said the senior official.

Efforts to get a comment from Zesa spokesperson Fullard Gwasira were fruitless as his mobile phone was not reachable.

In April, Zesa workers, through the National Energy Workers' Union of Zimbabwe, took the power utility to court alleging that the parastatal had embarked on a restructuring exercise which will result in the loss of between 1 700 and 2 000 jobs.

However, Gwasira was quoted at the time as saying Zesa was not embarking on a retrenchment exercise, but was aligning staff structures to the prevailing business model.

A 2015 Zesa annual audit conducted by BDO Chartered Accountants released last year indicated the existence of a material uncertainty over the parastatal's ability to continue operating as a going concern.

As of December 2015, the parastatal owed seven local banks, the Reserve Bank of Zimbabwe (RBZ) and the World Bank about US$180 million. Zesa also owed several non-banking entities, among them government (US$50,8 million) and Chinese energy firm Afrochine, (US$7 million).

"Zesa's current liabilities exceeded its current assets by US$66 178 820 (2014: US$65 321 390).

ZETDC incurred a loss before tax of US$111 474 084 (2014: US$118 312 961) and its current liabilities exceeded its current assets by US$771 383 372 (2014: US$958 567 146)," BDO said.

"The holding company and its subsidiaries ZETDC and ZPC failed to service their loans and consequently loans amounting to US$416 909 476 (2014: US$761 236 942) were due and payable. These conditions, along with other matters set forth under Note 24, indicate the existence of a material uncertainty that may cast significant doubt about the ability of the holding company and its significant subsidiaries to continue as going concerns."


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