adminplans, ZEC said there was need to quickly enact supporting legislation before the end of the current Parliament to ensure the plans are not caught up in bureaucratic processes when Government reconfigures after the harmonised elections due this year.
Government plans to unbundle Zesa Holdings, take over its debts and allow the stand-alone debt-free companies to seek strategic partners.
The council’s executive director Mr Panganayi Sithole said unbundling the power utility would do away with a holding group structure and allow the creation of stand-alone entities that compete with private firms.
“With the current set-up at Zesa, it is difficult to have new investment in the power sector,” he said. “Why we have difficulty in getting investment in the power sector is because when people produce power they need to sell it.
“The current set-up is that they (IPPs) sell the power to ZETDC, (which) is the only current buyer of power, but ZETDC is a subsidiary of Zesa Holdings together with the Zimbabwe Power Company.
“If we are going to have someone outside that family of Zesa Holdings producing power and selling to ZETDC, I do not think that ZETDC would buy the power at reasonable prices, in spite of the fact that Zera would have pegged the tariffs.
“ZETDC, ZPC and Zesa Enterprises are (almost) one and the same entity; they are subsidiaries of Zesa Holdings.”
Mr Sithole said the Government has licensed 15 private players, such as China Africa Sunlight Energy, Sengwa Coal and Essar.
The companies are planning to invest in power and would not be able to compete fairly with ZPC, if it remained a subsidiary of Zesa Holdings, which owns the only power purchaser, ZETDC.
Mr Sithole said breaking up Zesa as a group of companies would also result in the creation of a single State-owned buyer of electricity, National Grid Services Company, which would sell to distributors.
Cabinet approved the plans, while Energy and Power Development secretary Mr Partison Mbiriri, said in a recent interview that NGSC had been registered and what remained was its certificate of incorporation.
NGSC would take over Zesa and its subsidiary companies’ historic debts, amounting to over US$700 million, and leave ZPC as a stand-alone State enterprise.
The expectation is that the unbundled companies would become more competitive when their historic debts were taken away and housed under NGSC.
Mr Mbiriri drew parallels with Air Zimbabwe: the national airline had struggled for investors because of its debt, hence the need to relieve Zesa of the liabilities.
Independent power producers would, therefore, also be able to compete on level terms with former Zesa Holdings subsidiaries, such as its generation unit, ZPC.
“As such, we are going to have power generators on one side, and power distributors on the other, and the wholesale buyer will be NGCS,” he said.
When Zesa has been unbundled ZPC would have an independent board of directors and management reporting directly to the Government.
Mr Sithole said there would be flexibility in the search for investors.
There would also be no payment of management fees to Zesa and decision-making would be faster. ZPC would not report to two boards, its own and Zesa Holdings.
ZEC contends that fears were baseless that unbundling Zesa would leave some of its subsidiaries without a guardian and business ally – for instance, Zesa Enterprises which supplies the utility with transformers.
Zesa Enterprises is a commercial subsidiary, not bound by the Electricity Act and therefore had the latitude to explore a wide spectrum of business initiatives such as supporting the energy industry through assembling solar panels and water heaters.
But to ensure viability of operations after the break-up of Zesa as a group would require strategic planning and a complete paradigm shift to cope with the rigours of private sector competition.
Online Reporter