News / National
Zesa, BCC relations worsen
07 Feb 2018 at 12:35hrs | Views
ZESA Holdings (Zesa) owes the Bulawayo City Council (BCC) over $119 million after it emerged this week that the power utility has not been paying royalties for the past 10 years to BCC for the use of its power station.
According to an agreement between the power utility and the local authority, the former is supposed to pay $860 284 in royalty charges to the latter on a monthly basis for the use of the power infrastructure.
The council used to run the power station for electricity generation until in the late 1990's when the government gave a directive for all council-owned power stations to be handed over to Zesa.
Before the takeover council, which owns the power station, used to supply electricity to the second largest city.
However, with the latest haggle over bills between the council and the power utility, the latter has declined to pay the arrears instead preferring to leave it to the courts to decide.
Council chamber secretary Sikhangele Zhou gave an insight into the squabble that has for years left the two's relations strained.
"The agreement was that Zesa would pay royalties because they were using our structures. There was a formula that was being used to calculate the royalties, depending on the sales of electricity," she said.
Zhou added: "There was a time when electricity used to be expensive in the city because Zesa would add royalty charges on top of the money they sent to council.
However, a new reasonable formula was then agreed that people should pay similar rates while Zesa continued to pay its royalties to council for using our structures."
She said while Zesa continued paying the royalties consistently, they only stopped in 2008 due to hyperinflation that hit the country then as it became difficult to make monthly calculations for the royalties.
"They paid that until 2008. Due to inflation and with those inconsistent multiple zeros attached to our money then, it ended up confusing so they stopped paying.
However, in 2009 we went back for our royalties and told them that they should continue paying since there was a steady currency but since then we have never received any cent from them."
This comes at a time the Zimbabwe Power Company (ZPC) recently announced that it shut down the power station due to electricity oversupply in the country. Bulawayo power station has a capacity to produce 90 megawatts.
In 2016, Zesa — through its subsidiary the Zimbabwe Electricity Transmission and Distribution Company — approached the High Court seeking an order compelling BCC to settle its $80m power debt. However, in response, BCC filed a counter claim as they felt that Zesa in fact owed them more.
According to the latest council minutes BCC owes Zesa over $94m in unpaid electricity bills. However citing the disparities, BCC has been trying to enter into an offset deal with Zesa but the power utility has always argued it does not owe BCC any amount, hence, it would not enter into a deal with the local authority.
BCC insists that Zesa owes them huge amounts. "We charge royalty for the electricity infrastructure that Zesa uses. As a result, Zesa owes us more than we owe them; the matter is still before the courts," Zhou claimed.
According to an agreement between the power utility and the local authority, the former is supposed to pay $860 284 in royalty charges to the latter on a monthly basis for the use of the power infrastructure.
The council used to run the power station for electricity generation until in the late 1990's when the government gave a directive for all council-owned power stations to be handed over to Zesa.
Before the takeover council, which owns the power station, used to supply electricity to the second largest city.
However, with the latest haggle over bills between the council and the power utility, the latter has declined to pay the arrears instead preferring to leave it to the courts to decide.
Council chamber secretary Sikhangele Zhou gave an insight into the squabble that has for years left the two's relations strained.
"The agreement was that Zesa would pay royalties because they were using our structures. There was a formula that was being used to calculate the royalties, depending on the sales of electricity," she said.
However, a new reasonable formula was then agreed that people should pay similar rates while Zesa continued to pay its royalties to council for using our structures."
She said while Zesa continued paying the royalties consistently, they only stopped in 2008 due to hyperinflation that hit the country then as it became difficult to make monthly calculations for the royalties.
"They paid that until 2008. Due to inflation and with those inconsistent multiple zeros attached to our money then, it ended up confusing so they stopped paying.
However, in 2009 we went back for our royalties and told them that they should continue paying since there was a steady currency but since then we have never received any cent from them."
This comes at a time the Zimbabwe Power Company (ZPC) recently announced that it shut down the power station due to electricity oversupply in the country. Bulawayo power station has a capacity to produce 90 megawatts.
In 2016, Zesa — through its subsidiary the Zimbabwe Electricity Transmission and Distribution Company — approached the High Court seeking an order compelling BCC to settle its $80m power debt. However, in response, BCC filed a counter claim as they felt that Zesa in fact owed them more.
According to the latest council minutes BCC owes Zesa over $94m in unpaid electricity bills. However citing the disparities, BCC has been trying to enter into an offset deal with Zesa but the power utility has always argued it does not owe BCC any amount, hence, it would not enter into a deal with the local authority.
BCC insists that Zesa owes them huge amounts. "We charge royalty for the electricity infrastructure that Zesa uses. As a result, Zesa owes us more than we owe them; the matter is still before the courts," Zhou claimed.
Source - dailynews
