adminTHE Competition and Tariff Commission (CTC) has launched an investigation into a barter trade agreement between the Zimbabwe Electricity Transmission and Distrubution Company (ZETDC) and cable manufacturer, CAFCA.
The barter deal — which the two parties went into in September 2013 — entails ZETDC being supplied with aluminum electricity conducters by the cable-maker in exchange for ZETDC copper scrap.
Earlier in 2014 CAFCA managing director Rob Webster said they were benefiting from the barter trade agreement since the company no longer had to import expensive copper to meet its requirements.
Copper is selling at around $7 000 per tonne while aluminium fetches around $2 000 per tonne. What has led the CTC to delve into the matter are the monopolistic nature of the deal.
Said CTC yesterday: “It is alleged that owing to the barter trade agreement no other company can supply ZETDC with aluminum conductors thereby restricting competition in the market of distribution of aluminum electricity conductors. According to Section 28 of Zimbabwe’s Competition Act (Chapter 14: 28), the CTC is empowered to investigate issues of “restrictive practices”.
“Prima facie, the agreement between ZETDC and CAFCA may constitute a restrictive practice in terms of the Act with the effect that it may restrict the entry of other aluminum electricity conductor suppliers into the market of distribution of aluminum electricity conductors. The ZETDC-CAFCA deal was initially supposed to expire in August 2015, but it was extended further as both parties were accruing significant benefits.
As at the end of 2014, ZETDC had saved around $26,4 million while CAFCA had significantly reduced its overheads by cutting out its import bill as it was no longer importing any copper.
— BH24
Bongani Ndlovu