Friday, June 30, 2017

Zimbabwe Government to Consolidate Zesa Operations
By Tinashe Makichi
Zimbabwe Herald

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.

No comments: