ZETDC faces ZWG10bn loss

The Zimbabwe Electricity Transmission and Distribution Company (ZETDC) is facing mounting financial pressure after the Auditor-General revealed the power utility recorded a ZWG10 billion operating loss, with liabilities far exceeding assets and foreign loan repayments in default.

According to the Auditor-General's Report on State-Owned Enterprises and Parastatals for the financial year ended December 31, 2025, ZETDC's financial position has raised significant concerns about its ability to continue operating as a going concern, despite receiving an unmodified audit opinion on its financial statements.

The report found that the utility's current liabilities exceeded its current assets by ZWG29.9 billion, while foreign loans that had not been restructured were reclassified as current liabilities after ZETDC failed to meet repayment obligations.

"These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern," the Auditor-General said.

The financial difficulties have also affected electricity service delivery, with the audit revealing that some customers who paid in full for electricity connections have remained unconnected for nearly a decade.

According to the report, some applications submitted as far back as 2016 remain outstanding because of shortages of connection materials, a situation the Auditor-General warned could undermine service delivery.

ZETDC acknowledged the delays, attributing them to long-standing cash-flow challenges.

"Delays in connecting customers were mainly due to shortages of connection materials as a result of cash-flow constraints the Company has been facing for a long time," the utility said.

The audit also revealed that ZETDC incurred ZWG230.8 million in penalties and interest after failing to make timely payments of Value Added Tax (VAT), Pay-As-You-Earn (PAYE) and income tax.

Management said the penalties were a direct consequence of the company's financial difficulties.

"The ZWG230.8 million under 2024 fines and penalties relates to interest on late payments for VAT, PAYE and income tax due to serious cash-flow challenges the Company is facing," ZETDC said.

The Auditor-General further highlighted weaknesses in procurement and contract management, noting that the utility made advance payments amounting to ZWG6.9 million in 2023 for electrical switchgears that had still not been delivered by December 31, 2024.

The equipment remained classified as goods in transit, while some supplier prepayments dating back to 2019 had yet to be cleared.

ZETDC attributed the delays to pricing discrepancies between purchase vouchers and supplier invoices.

The report also noted that several issues raised in previous audits remain unresolved, including weaknesses in asset management, outstanding statutory obligations and unreconciled account balances.

The utility continued to cite persistent cash-flow constraints as the primary obstacle to addressing the outstanding audit findings.

The Auditor-General's report adds to growing concerns over the financial sustainability of Zimbabwe's electricity distribution utility as it struggles to maintain operations, invest in infrastructure and improve service delivery amid mounting debt and liquidity challenges.