Zesa to be rebundled

Zimbabwe's state power utility, Zesa Holdings, is set to be rebundled nearly three decades after it was unbundled, in a policy reversal that underscores the government's reassessment of reforms introduced in the late 1990s.

Sovereign Wealth Fund Mutapa Investment Fund (MIF) chief executive John Mangudya said the rebundling of Zesa is aimed at improving operational efficiency - the same objective that originally justified its unbundling almost 29 years ago.

Rebundling is the strategic consolidation of previously fragmented or unbundled entities into a single integrated structure.

Mangudya said the process, which follows a Cabinet resolution, is now being consummated. He was speaking at a Zimpapers public lecture series held at the Harare Institute of Technology last Friday.

Zesa was first unbundled in 1997 as part of broader public sector and economic reforms. The restructuring was deepened by the Electricity Act of 2002, with further changes implemented between 2002 and 2003, and later in 2006. These reforms resulted in the creation of distinct subsidiary companies operating under Zesa Holdings.

The current structure includes the Zimbabwe Power Company (ZPC), responsible for electricity generation; the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), which handles transmission and distribution; and Powertel, the group's telecommunications arm.

At the time, policymakers argued that separating generation, transmission and distribution would enhance efficiency, transparency and financial viability, while also paving the way for private sector participation in the energy sector.

However, Mangudya noted that the unbundled structure has, over time, proved costly and inefficient. According to him, overlapping functions, high administrative costs and coordination challenges undermined the very efficiencies the reforms sought to achieve.

As a result, Cabinet took a decision between 2018 and 2021 to begin reversing the unbundling process, opting instead to reintegrate the entities into a single utility. Mangudya said the rebundling process is now reaching its final stages.

The move places Zimbabwe among a number of countries that have revisited earlier power sector liberalisation models after mixed results, particularly in state-dominated and fiscally constrained economies.

Zesa Holdings, which has struggled with aging infrastructure, chronic power shortages and financial constraints, is now expected to operate as a more centralised entity, with the government hoping that tighter coordination and reduced overheads will improve performance and service delivery.

Further details on how the rebundling will be implemented, including the future roles of the existing subsidiaries, are expected to be announced in due course.