Government rejects ZETDC proposal

Source: Government rejects ZETDC proposal | The Financial Gazette 12 January 2017

GOVERNMENT has dismissed a proposal by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) to sack about 1 600 workers, the Financial Gazette’s Companies & Markets (C&M) can reveal.
The move appears to undermine efforts by the power company to cut costs and stem losses in line with government objectives to make parastatals profitable.
The ZETDC has a workforce in excess of 5 300, and this has been bleeding the parastatal through an unsustainable salary and wage bill.
ZETDC, a unit of integrated power group, ZESA Holdings, had cited huge operational costs, persistent losses and the fact that most electricity consumers were now being served directly by third party vendors as some of the reasons that necessitated the proposed downsizing of its workforce.
The company also wanted to create a learner structure, which is more cost effective.
C&M understands that the power utility is closing down the majority of its banking halls across the country, as part of efforts to make the financially troubled parastatal viable in response to the emergence of third party vendors.
But, last week, a senior government official confirmed that government did not approve the proposal. The official did not give the reason for government’s decision.
He said government directed the power utility to redeploy those who were the subject of the redundancy exercise to other departments.
“Government has rejected a proposal by ZETDC to undertake a redundancy exercise,” the director of policy and planning in the Ministry of Energy and Power Development, Benson Munyaradzi, told C&M last week.
“Instead, we said these (workers) should be re-deployed to other departments within ZETDC.”
Inevitably, Zimbabwe is racing towards elections in 2018 and the ruling ZANU-PF party, which romped to a landslide victory in 2013 elections on the back of promises to create two million new jobs in the economy, would not want to be seen sanctioning layoffs ahead of the decisive polls.
Since its election victory which resulted in the collapse of an inclusive government with opposition parties, the economy has been on free fall, with widespread company closures and job losses.
ZETDC managing director, Julian Chinembiri, was not available for comment.
ZESA’s acting spokesperson, Shepherd Mandizvidza, dismissed claims of mass retrenchment, saying ZETDC would redeploy staff affected by recent developments within the company to other departments.
“ZETDC has successfully implemented the third party vending project of electricity and has taken a strategic business decision to relocate and reassign some of its staff that used to man its banking halls countrywide to ensure that they continue adding value to its product and service supply chain to the best advantage of the consumers.
“The power utility has not laid off any of its employees as they still have a role to play in the organisation. ZETDC is a responsible corporate citizen and when there is need for the organisation to streamline its operations accordingly, relevant consultations are done with the shareholder and all stakeholders,” Mandizvidza said.
But a ZETDC proposal seen by this newspaper last week indicated that the power utility was seeking to lay off 1 402 of its semi-skilled workers; it was also seeking to retrench 90 of its skilled trades manpower, 35 general workers, 60 professional supervisors and 15 middle managers. The company, however, wanted to add two more senior managers.
While the move by government will be welcomed by workers, this will, however, not sit well with the power utility, which has not been awarded a tariff increase since 2011. In addition, there has been no financial provision for the temporary emergency power which it has been buying at a huge cost.
This has negatively affected the financial position of the power utility.
The power utility incurred a loss of US$140 million during the nine months to September 2016. This was projected to rise to US$223 million by the end of last year.
ZESA’s power stations in Kariba, Hwange, Bulawayo, Harare and Munyati are generating a combined 1 000 megawatts (MW) of electricity, which is not enough to meet national demand of about 1 600MW.
To cover for the power supply gap, ZETDC is importing electricity from South Africa on a non-firm power purchase agreement and from Mozambique on a firm agreement. Eskom of South Africa is supplying Zimbabwe with about 350MW of electricity depending on availability, while Mozambique’s power utility, Hydro Cahorra Basa (HCB), is exporting about 50MW of electricity to Zimbabwe.
ZETDC is paying on average a monthly bill of about US$10,5 million for power from Eskom and about US$2,6 million for electricity from HCB.
ZETDC is also procuring about 100MW of electricity from Dema Diesel Power Plant, an independent power producer owned by energy firm, Sakunda Holdings. The plant was commissioned in July last year.
It is understood that ZETDC signed a three year power purchase agreement with Sakunda Holdings. Under this deal, the power utility is paying an average monthly bill of about US$7,5 million.