Govt is­sues $500m Trea­sury Bills to Zesa to avert power out­ages

Chronicle (Zimbabwe) - - Business - Harare Bureau

GOV­ERN­MENT has had to move in to bail out the Zimbabwe Elec­tric­ity Sup­ply Au­thor­ity by ex­tend­ing Trea­sury Bills to the tune of $500 mil­lion to avert se­ri­ous power out­ages. This comes as the State power en­tity has only so far re­ceived a mere 14 per­cent of bud­getary sup­port al­lo­cated to it in the 2017 Na­tional Bud­get.

TBs are ba­si­cally short term ne­go­tiable in­stru­ments is­sued by the Gov­ern­ment through the Re­serve Bank of Zimbabwe (RBZ) to fi­nance the State’s short-term re­quire­ments.

They are is­sued for pe­ri­ods rang­ing from 30 to 365 days. En­ergy and Power De­vel­op­ment Min­istry per­ma­nent sec­re­tary Pat­ter­son Mbiriri said with­out the TBs fa­cil­ity the coun­try would have been fac­ing a dif­fer­ent en­ergy sta­tus quo.

“We are grate­ful that we were given dur­ing the course of the year, trea­sury bills — I know there is a lot of de­bate sur­round­ing Trea­sury Bills and their im­pact on the macro-econ­omy of the coun­try — but nonethe­less we have had Trea­sury Bills to the value of $500 mil­lion put on the ta­ble for us to set­tle our bills, par­tic­u­larly those bills that were threat­en­ing en­ergy sup­ply.

“That said we con­tex­tu­alise our fig­ures. Out of a bud­get of $6, 288 mil­lion for 2017 we have been availed $0, 88 mil­lion, the bulk of that go­ing into salar­ies and so we have re­alised 14 per­cent of bud­get to date and of course that raises ques­tions about 2018 in terms of ca­pac­ity to sup­port this crit­i­cal sec­tor,” he told the Par­lia­men­tary Port­fo­lio Com­mit­tee on Mines re­cently.

TBs are gen­er­ally con­sid­ered as the least risky of all is­sued pa­per in­so­far as they are guar­an­teed by Gov­ern­ment, but some mar­ket an­a­lysts have said that the a de­clin­ing mo­men­tum in eco­nomic ac­tiv­ity and high debt serv­ing costs could pose some fi­nan­cial risks on do­mes­tic debt in­stru­ment hold­ers.

Trea­sury has how­ever since moved to ease mar­ket con­cerns over TBs is­suances, stat­ing in 2016 that go­ing for­ward the is­suance of new TBs would be guided by pro­jected cash-flows.

A num­ber of fi­nan­cial play­ers hold Govern­men­tis­sued TBs, as they have be­come the main debt in­stru­ment avail­able in the mar­ket af­ter Gov­ern­ment con­verted its legacy debt into short-dated Gov­ern­ment se­cu­rity.

Mr Mbiriri, how­ever, high­lighted that the $500 mil­lion TB is­suance was a “once-off ” and TBs would not be is­sued to fund on­go­ing en­ergy projects.

“In terms of TBs our un­der­stand­ing is that it was a once-off pay­ment. There is no in­ten­tion or ex­pec­ta­tion on our part that this will con­tinue as a stand­ing ar­range­ment. It was a once-off to deal with a par­tic­u­lar sit­u­a­tion where no­body could move for­ward. Us as en­ergy sup­pli­ers and those that ser­vice us, we had a stale­mate sit­u­a­tion,” he said.

Aerial view of the Bulawayo Power Sta­tion. Gov­ern­ment has had to move in to bail out the Zimbabwe Elec­tric­ity Sup­ply Au­thor­ity by ex­tend­ing Trea­sury Bills to the tune of $500 mil­lion to avert se­ri­ous power out­ages

Newspapers in English

Newspapers from Zimbabwe

© PressReader. All rights reserved.