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Govt drafts law for Zesa re-bundling

by Staff reporter
29 Sep 2019 at 12:17hrs | Views
Government has drafted a law that will enable it to consolidate Zesa's four subsidiaries into one entity, and is now in the process of roping in a consultant that will help rebundle the power utility.

The undertaking, which is part of Government's initiative to restructure State-owned enterprises (SOEs) that have been draining the fiscus through suboptimal operations and periodic bailouts from Treasury, is envisaged to result in significant cost savings and operational efficiencies. Secretary for State enterprises reform, corporate governance reform and procurement in the Office of the President and Cabinet Mr Willard Manungo told The Sunday Mail that the Statutory Instrument to give effect to the consolidation process now awaits gazetting.

"The bundling of Zesa Group is underway. A Statutory Instrument to give effect to the consolidation of Zesa companies has been drafted and is awaiting gazetting," he said.

"The Ministry of Energy and Power Development is in the process of procuring a consultant through the public procurement law to assist in the consolidation of companies. The consultant shall give guidance on developing optimal operational functions and structure."

Zesa was unbundled into four entities - Zimbabwe Electricity Transmission and Distribution Company (Zetdc), Zimbabwe Power Company (ZPC), Powertel Communications and Zesa Enterprises (Zent) - in 2006.

Each unit has its own executive management staff and board of directors.

The current structure is viewed as both unwieldy and untenable as it significantly adds to the power utility's wage bill without any increase in efficiency or power.


Government's multiple strategy to restructure SOEs, which includes mergers, privatisation, partial privatisation, partnerships and dissolutions, has made significant headway.

Enterprises such as the National Indigenisation and Economic Empowerment Board, Board of Censors, National Library and Documentation Services, and National Liquor Licensing Authority, have since been departmentalised under their line ministries.

Government has also approved restructuring strategies for nine parastatals - TelOne, NetOne, Zimparks, Allied Timbers, ZMDC, GMB and Silo, CSC, Zesa and Zupco.

Transactional advisors for seven SOEs have already been engaged.

Mr Manungo said: "Broadly, the terms of references (for transactional advisors) provide for the undertaking of due diligence on the identified State-owned enterprises, development of prospectus or information memorandum, undertaking of business valuation, advising on appropriate privatisation method, preparation of bidding documents, undertaking due diligence of potential investors, negotiation with identified investor, developing sale agreements and draft shareholders' agreements."

Ownership model

Further, a South African company, Rebel Consulting Group, has been roped in to help undertake the review of the SOEs ownership model. Government intends to finalise the State Enterprises Reform Framework by 2020.

The reform of State entities is expected to drive economic growth and result in significant cost savings.

"Privatisation results in improved performance of privatised enterprise. The improved performance will culminate in improved tax revenues to the fiscus in terms of corporate taxes and Value Added Tax (VAT), et cetera," said Mr Manungo.

According to the latest Auditor-General's report, 38 out of 93 SOEs incurred a combined loss of $270 million in 2016.

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Source - zimpapers