Latest News Editor's Choice

News / Local

BCC, Zesa clash over royalties

by Staff reporter
07 Jun 2015 at 13:39hrs | Views
A BITTER war is raging between the Bulawayo City Council (BCC) and the Zimbabwe Electricity Supply Authority (Zesa) over the Bulawayo Thermal Power Station with the former accusing Zesa of not only failing to pay compensation after taking over the running of the power station but also not honouring yearly royalties.

This comes at a time when the power utility has switched off a number of council facilities over the non-payment of electricity bills, a move which the local authority has deemed unfair considering that Zesa owes the local authority millions of dollars in unpaid royalties.

The local authority has to pay about $1,2 million per month for the pumping of water supplies.

The Bulawayo Thermal Power Station, built by council, became part of Zesa in 1987 after the amalgamation of all the local authority electricity undertakings.

According to a council report, at one point Zesa used to pay the local authority but halted the payments under unclear circumstances.

"The financial director (Mr Kimpton Ndimande) explained that Zesa did not compensate council for the takeover of Bulawayo Power Station. However, records showed that at one point council was receiving royalties but Zesa had unilaterally discontinued this, the matter was now being investigated," reads part of the minutes.

In an interview with Sunday News, Bulawayo Mayor Councillor Martin Moyo claimed Zesa owed the local authority over $62 million in royalties for the power station of which BCC owes the power utility more than $40 million.

"It is a known fact that Zesa owes BCC in royalties, our finance department calculated the figure to $62 million but it is unfortunate that the power utility rejected the figure, which is quite surprising as this is a figure as per the initial agreement which saw them take over the power station.

"What is unfortunate is that this comes at a time when council also owes Zesa and they have gone on to switch off a number of our facilities. If we are to be fair, it is a fact that they owe way more than us. We are not saying we want money from them which is why we were trying to reach an agreement where this figure would be offset, as in no exchange of any finances but rather we cancel each other's debts using the amounts we owe each other," said Clr Moyo.

The mayor said while the transfer of the power station was through an Act of Parliament the power utility still had to pay for the infrastructure that had been put in place by the local authority before the transfer.

"They know that they owe us because it is them that stopped the annual payments abruptly therefore I see no reason why there is all this confusion regarding them honouring their debt," said the mayor.

Clr Moyo said it was not an issue of wanting to take over the power station but it was all about the power utility paying the royalties as had been agreed when they took over the power station.

Questioned on how the two institutions had originally agreed to calculate the exact figure to be paid in compensation and period, Clr Moyo said this was a technical question which he had to inquire with the finance department.

Contacted for comment, Zesa public relations officer Mr Fullard Gwasira said he needed more time to look into the issue so as to get the finer details.

"Call me next week maybe I will have the details on that matter," said Mr Gwasira.

However, a Zesa official, who spoke on condition of anonymity, said the figure which was being suggested by the local authority was too high and they were also not stating the formula they used to get to the figure.

"It is simple, BCC just sat and decided a figure from nowhere and presented it to Zesa. I believe if any royalties are to paid the figure should be arrived at by both parties not just one," said the official.

BCC has on a number of occasions insisted that the power station had to be returned to the local authority so as to improve the situation there, at one point even the Urban Councils Association of Zimbabwe (UCAZ) attempted to petition the Government to intervene in the impasse.

BCC has in the past also accused the power utility of running down the power station.

The council's position on the station was hardened in 2011 after Zesa disconnected electricity to Tower Block and the city council over a debt of more than $20 million.

A couple of years ago, the Harare City Council also demanded the Harare Thermal Power Station back from Zesa.

Source - sundaynews