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Zimbabwe: consolidation looming for ZESA Holdings operations

Deloitte consultants are finalising a study expected to persuade government to consolidate ZESA Holdings operations, as the current structure is considered costly and unsustainable.

Speaking to The Herald Business, the energy and power development permanent secretary, Patson Mbiriri, confirmed the development.

It is reported that the move is driven by concerns over corporate governance conflict within the group in terms of mandate, delivery and decision making.

According to media, the Zimbabwean Electricity Act (Chapter 13:19) provided for the formation of five successor companies each with its own board of directors.

The companies include the Zimbabwe Power Company, Zimbabwe Electricity Transmission Company, Zimbabwe Electricity Distribution Company, ZESA Enterprises and Powertel Communications.

ZESA Holdings operations for consolidation

The existence of individual boards for subsidiary companies has resulted in the duplication of roles and parroting of the holdings board’s decision by subsidiary boards.

Deloitte Consultants are finalising a study on how the ZESA Group can be rendered more efficient. Government will consider their recommendations as and when they are made which should be very soon,” Mbiriri said.

Under the current set up, it is reported that the role of subsidiary boards still remain unclear and that there is a corporate governance conflict in terms of throughput and the decision making matrix.

A source known to the Herald Business said: “It has become costly for the group that subsidiary boards have to sit over a decision already made by the holding company board and all they do is to mimic what the holding board has already resolved.”

Unbundling ZESA

Media also reported that energy and power development minister, Dr Samuel Undenge, recently said Cabinet made a decision in the past that ZESA must be unbundled and another different decision is now being considered. Read more…

“I think circumstances are now different and now there is a talk that ZESA is top heavy and we should look at the cost structure and that is what is happening.

“Nothing is permanent and things change. You can unbundle today perhaps 20 years to come you go back to the old situation depending on the dynamics. A report is going to be submitted to me, then I will present it to Cabinet,” Minister Undenge stated.

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Babalwa Bungane
Babalwa Bungane is the content producer for ESI Africa - Clarion Events Africa. Babalwa has been writing for the publication for over five years. She also contributes to sister publications; Smart Energy International and Power Engineering International. Babalwa is a social media enthusiast.