Govt to con­sol­i­date ZESA op­er­a­tions

The Herald (Zimbabwe) - - Business - Ti­nashe Ma­kichi Busi­ness Re­porter

ZESA Hold­ings op­er­a­tions could soon be merged into one struc­ture as Gov­ern­ment is mov­ing to con­tain costs and im­prove ef­fi­ciency at the util­ity.

Deloitte Con­sul­tants are fi­nal­is­ing a study ex­pected to per­suade Gov­ern­ment to con­sol­i­date ZESA Hold­ings op­er­a­tions, as the cur­rent struc­ture is con­sid­ered costly and un­sus­tain­able.

The lat­est move by Gov­ern­ment is in­formed by con­cerns over cor­po­rate gov­er­nance con­flict within the group in terms of man­date, de­liv­ery and de­ci­sion mak­ing, ac­cord­ing to sources

The Elec­tric­ity Act (Chap­ter 13:19) pro­vided for the for­ma­tion of five suc­ces­sor com­pa­nies each with its own board of di­rec­tors.

The com­pa­nies in­clude the Zim­babwe Power Com­pany, Zim­babwe Elec­tric­ity Trans­mis­sion Com­pany, Zim­babwe Elec­tric­ity Dis­tri­bu­tion Com­pany, ZESA En­ter­prises and Pow­er­tel Com­mu­ni­ca­tions.

The ex­is­tence of in­di­vid­ual boards for sub­sidiary com­pa­nies has seen the group be­com­ing top heavy.

Also there were cases where there was du­pli­ca­tion of roles and par­rot­ing of the hold­ings board’s de­ci­sion by sub­sidiary boards.

En­ergy and Power Devel­op­ment Per­ma­nent Sec­re­tary, Pat­son Mbiriri con­firmed to The Her­ald Busi­ness that a study is be­ing car­ried out aimed at im­prov­ing ef­fi­ciency at the power util­ity.

“Deloitte Con­sul­tants are fi­nal­is­ing a study on how the ZESA Group can be ren­dered more ef­fi­cient. Gov­ern­ment will con­sider their rec­om­men­da­tions as and when they are made which should be very soon,” said Mr Mbiriri.

Un­der the cur­rent set up, sources said that the role of sub­sidiary boards still re­mained un­clear and that there was a cor­po­rate gov­er­nance con­flict in terms of through­put and the de­ci­sion mak­ing ma­trix.

“It has be­come costly for the group that sub­sidiary boards have to sit over a de­ci­sion al­ready made by the hold­ing com­pany board and all they do is to mimic what the hold­ing board has al­ready re­solved,” said a source at the power util­ity.

En­ergy and Power Devel­op­ment Min­is­ter Dr Sa­muel Un­denge re­cently said Cabi­net had made a de­ci­sion in the past that ZESA must be un­bun­dled and an­other dif­fer­ent de­ci­sion is in now in the off­ing.

“I think cir­cum­stances are now dif­fer­ent and now there is a talk that ZESA is top heavy and we should look at the cost struc­ture and that is what is hap­pen­ing.

“Noth­ing is per­ma­nent and things change. You can un­bun­dle to­day per­haps 20 years to come you go back to the old si­t­u­a­tion depend­ing on the dy­nam­ics. A re­port is go­ing to be sub­mit­ted to me, then I will present it to Cabi­net,” said Min­is­ter Un­denge.

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