AG EXPOSES ROT AT ZESA:

ZIMBABWE Electricity Transmission and Distribution Company (ZETDC) paid Powertel close to $10 million as commission for selling prepaid electricity to wholesalers, something it could have done itself, Auditor-General Mrs Mildred Chiri has revealed.

The electricity supplier also suffered a financial loss through under billing with some meter readings last conducted in 1984.

In her report on State Enterprises and Parastatals for the financial year ending December 31, 2016, Mrs Chiri notes that ZETDC is a subsidiary of ZESA Holdings and its business is the distribution and retail of electricity to the final user.

She recommends that the company sells electricity directly to wholesalers and that meter readings should be done within a period of three months in accordance to company policy.

“Without qualifying my audit opinion, I draw your attention to the fact that the company incurred a loss before tax of $111 474 084 (2014: $118 312 961) for the year ended December 31, 2015 and as of that date its current liabilities exceeded its current assets by $771 383 372 (2014: $958 567 146).

“The company also had an accumulated loss of $516 649 272 (2014: $438 326 775).

“These conditions along with other matters indicate the existence of a material uncertainty that may cast significant doubt about the ability of the company to continue operating as a going concern,” Mrs Chiri said.

On the distribution of electricity, the Auditor-General said the company sold its prepaid electricity through Powertel, which in turn distributes electricity to 10

wholesalers (super vendors) who also distribute the electricity to sub-vendors.

“The economic rationale of selling through Powertel is not clear as the company has a capacity to sell

directly to wholesalers. This eliminates commission paid to Powertel and also improves efficiency of the network and the total amount paid during the year was $9 646, 318,” reads the report.

The auditor concluded that there was financial loss through unnecessary commission costs due to inefficiency of the prepaid metering system network as a result of increased layers of vendors.

There was also financial loss through under billing.

“The company’s policy requires that all meters should have actual readings taken at least once in three months. Some customers, however, had actual meter readings last recorded some years back, for example in 1984, 1991 and 2005. Other clients’ readings took up to 982 days before they were taken,” Mrs Chiri notes in her report.

The report states that 191 162 meters have not been read for over one year, while 15 782 have not been read in two years, 7 372 (three years), 2 795 (four years), 531 (five years) and 1 861 (over five years).

In its response, ZETDC said: “The preferred model is one with multiple aggregators (wholesalers) connecting directly to the ZETDC prepaid platform as recommended by the auditors.

“However, ZETDC adopted a model that was in line with the aspirations enshrined in the Zim-Asset blueprint with Powertel as the sole aggregator and eight State-owned enterprises as super vendors. The company is currently in the process of reviewing the third party vending model to make it more efficient.

“The company is in the process of replacing post-paid meters with prepaid meters. Approximately 130 000 customers are still to be placed on the pre-paid platform and these installations are expected to be completed by year end.”