A history of ZESAs fall from grace

This is according to investigations by The Zimbabwean, in which we spoke to current and former senior executives at ZESA, legislators, consumers and experts on the power utility’s unending woes.

A tour of the carnage Mugabe and Zanu (PF) have caused over a period of two decades paints a horrific picture. One that involves the awarding of tenders to incompetent suppliers, the looting of ZESA coffers to pay off war veterans, the setting of tariffs below the cost of supply, the engaging in an unsustainable rural electrification project to garner votes and entering into contracts unfavourable to Zimbabwe to please Mugabe’s political allies, including the Namibians.

SA taxpayers money

ZESA is currently shopping for about US$1 billion to sort out its mess. Of that amount, US$385 million will go towards upgrading and replacing vandalised equipment, much of which was looted by the organisation’s own staff.

Another US$135 million will be required to fix Hwange power station, which is operating below capacity. This is despite a costly deal in which technicians from Namibia repaired part of the plant in exchange for a supply of 150 megawatts of electricity for five years. After ZESA failed to pay for coal from Hwange Colliery Company, and were in danger of defaulting on the Namibian contract, they were ordered by an unnamed senior government official to divert electricity provided at by Eskom of South Africa to Windhoek. The electricity is subsidized by South African taxpayers.

Energy and power development minister, Elias Mudzuri, has since ordered ZESA not to forward South African power to Namibia. The power utility also needs US$430 million to pay off its debts. However, it is unclear where ZESA will get the required amounts. Finance minister Tendai Biti allocated them only US$53 million in the 2010 budget, while the African Development Bank pledged US$51 million and the European Union offered US$1,4 million.

While Mudzuri was telling investors at the recent Southern Africa Energy Week conference in Johannesburg that the ministry was pursuing private-public partnerships as a way of recapitalising Zesa and ending the country’s energy nightmares, observers remained sceptical.

Consumers are furious that the power utility is failing to live up to expectations. Daily power cuts mean added costs for households and lost business for corporations. Some businesses, especially mines, now have to import their own electricity, at great cost, from neighbouring countries. Or, they have to use generators that are expensive to run, pushing up the cost of doing business.

The extent of the rot

The Combined Harare Residents Association (CHRA) chairman, Tariro Shumba, for example, has threatened street demonstrations and warned that his members will stop paying their bills and sue ZESA for equipment damaged during regular unannounced power blackouts.

Zimbabwe Lawyers for Human Rights (ZLHR) executive director, Irene Petras, said that Zesa, like all other parastatals, should be independently audited to determine the extent of the rot. In response to mounting consumer pressure, ZESAs public relations manager, Fullard Gwasira, typically responds by saying the utility is ‘doing its best’.

In 1992, the government approved the World Bank-funded System Development Plan which, according to officials, was to develop Zimbabwe’s own electricity generation capacity to levels where the country could export to its neighbours. The project would have involved building the 800 MW Batoka power station between Kariba and Victoria Falls.

“This was a run-of-the-river project. It didn’t need construction of a dam and would have been very effective,” said a former ZESA manager. At that time the World Bank had promised US$1.6 billion for the project and an additional US$800 million for the refurbishment of Hwange power station. The WB had also pledged funds for the completion of Hwange phase 7 and 8, which would have enabled Zimbabwe to be a net exporter of electricity by now if it had been implemented.

Contract controversy

Controversy arose because while a UK company, National Power, had won the contract to carry out the work, Mugabe preferred to give the job to YTL of Malaysia. “The controversy arose because YTL didn’t have the capacity to build a power station. They were only a building company, not a power company,” said the former executive.

According to our sources, Mugabe wanted Hwange privatised and sold to YTL for a ‘paltry’ US$350 million but the plan met with resistance from within the ranks of Zanu (PF). The default plan was to develop Sengwe coal fields, with 100 years of reserves. Again this fell into problems as it was to be mined by Rio Tinto, also a British company.

“It is shocking that of all the power projects initiated after independence, not one has been completed,” the former executive said. In 1986 Zesa was formed on the basis of assets belonging to the Central African Power Corporation (CAPCO). It also took over the assets of various municipalities under the pretext of standardising tariffs.

“Imports from Mozambique and South Africa were supposed to be temporary while we developed our own capacity or when there was an emergency,” the executive said. He added that Zimbabwe had only been fortunate that inter-connectors from regional countries were in Zimbabwe, otherwise the country would have been cut off by now for non-payment of its bills. South Africa indicated that it had run out of capacity for exports of electricity in 2003 but has continued to supply Zimbabwe, with a domestic shortage, for political reasons.

What should have been

According to a schedule seen by this publication, Batoka should have been up and running by 2003, Hwange 7 and 8 by 2005 and Sengwe by 2007. However, none of this has been done. The problem grew worse when the government ran out of foreign currency for power imports and had no money for coal. The breaking down of the railway system also meant problems in moving coal, while ZESA’s coffers were sapped by uneconomic rates charged over a long period of time.

The final nail in the coffin came in 1998 when ZESA was forced to surrender a massive US$88 million to the government for the payment of war veterans.