Chigunta accuses IMF of being unhappy at Zesco's non-privatisation

Chigunta accuses IMF of being unhappy at Zesco's non-privatisation
By Joan Chirwa
Friday May 16, 2008 [04:00]

ZESCO Limited only needs organisational restructuring and streamlining as it is a very viable company, University of Zambia (UNZA) development studies lecturer Dr Francis Chigunta has said. Dr Chigunta said the recent assessment of Zesco’s commercial viability by the International Monetary Fund (IMF) resulted from government’s refusal to privatise the entity.

He was commenting on IMF’s recent summary paper on Zambia’s electricity sector, which described Zesco as a financially unviable company that was incapable of mobilising resources for the necessary expansion of power generation and the electricity grid.

“It is apparent that the IMF is not happy with the government over its refusal to privatise Zesco. Zesco is this large octopus which combines the functions of power generation, transmission and distribution in one. The IMF would have wanted to see this octopus cut to size.

That is, unbundling it, to use their term,” Dr Chigunta said. “In my opinion, we need to establish whether Zesco is supposed to be a profit-making firm or not. Obviously, the IMF assumes that Zesco should be making a profit. Failure to do so renders the corporation ‘bankrupt’ in order to pave way for its unbundling.”

Dr Chigunta said although Zesco Limited was established to serve a social function, the utility should be allowed to operate commercially and viably in order to give a reliable power service to Zambians.

“As far as I am concerned, Zesco was established to serve a social function. The shareholders are the Zambian people through the State. Zambia is not supposed to be making profits; rather Zesco is supposed to be delivering a reliable service to the Zambian people,” Dr Chigunta said. “This, however, does not mean that Zesco should not operate commercially and viably. Zesco should operate commercially and viably in order to give the Zambian people a reliable power supply and the issue of bankruptcy does not arise here.”

The IMF stated that Zesco was a troubled company, beset by well-known inefficiencies and high costs, contributing to the strong resistance to increases in electricity tariffs.

But Zesco Limited managing director Rhodnie Sisala last Friday refuted IMF’s assessment, saying the comments were not made in a sincere manner as the IMF had always worked closely with government in mapping out the growth strategy for Zesco Limited.