Competition watchdog probes Zesa, CAFCA barter deal

Competition watchdog probes Zesa, CAFCA barter deal

Source: Competition watchdog probes Zesa, CAFCA barter deal | The Financial Gazette  May 16, 2017

ZIMBABWE’S competition watchdog has opened an investigation into a case of suspected anti-competitive behaviour between the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) and CAFCA.

ZETDC is a subsidiary of power parastatal Zesa.

Cable maker CAFCA entered into a barter trade deal with ZETDC whereby it supplies ZETDC aluminum electricity conductors in return for copper scrap – a critical input for the manufacturer.

Zimbabwean businesses, including manufacturers and mines, are struggling to pay foreign suppliers of raw materials due to the country’s worsening foreign currency shortages, forcing some to resort to barter deals such as the one under probe.

The competition watchdog will examine if the ZETDC-CAFCA arrangement restricts competition, following allegations that no other company can supply the power utility.

“The Commission will, in accordance with the provisions of Sections 28 of the Act, conduct an investigation into the barter trade agreement between ZETDC and CAFCA to determine whether the agreement restricts competition directly or indirectly to material degree,” the Competition and Tariff Commission said in a notice on Thursday.

CAFCA has on several occasions mentioned that the ZETDC deal has shored up its business.

An official close to the investigation said the process can take up to a year.  – The Source

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