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Zesco shouldn't put blame on low tarrifs - NESAWU

Zesco shouldn't put blame on low tarrifs - NESAWU
By Kabanda Chulu
Tuesday June 10, 2008 [04:00]

NATIONAL Energy Sector Allied Workers Union (NESAWU) general secretary Yotam Mtayachalo has said Zesco Limited should not blame its problems on low tariffs because management is failing to collect over K400 billion in local debts. And Mtayachalo has said there was no need to unbundle ZESCO because creation of separate companies to handle generation, transmission and distribution would work towards profit maximization hence passing the cost to consumers.

Speaking last Friday, Mtayachalo said it does not make economical sense to have higher electricity tariffs when management was already failing to collect billions of kwacha owed in debt.

“Zesco is owed in excess of K400 billion in uncollected revenue and the reasons being advanced by management that they want increased tariffs to finance building of hydro power stations is not true because these are huge capital investments needing government involvement,” Mtayachalo said. “The Kaunda government managed to build Kafue hydro power station in the early 70s with the help of Yugoslavia and it is sad that the MMD government has not built any and not even a mini hydro station in the 17 years, they have been in office.”

According to the 2007 annual report, Zesco Limited made a huge exchange loss of K173 billion and the company attributed the loss to depreciation of the kwacha and the current uneconomic tariffs.

Mtayachalo said there was no job security especially among the directors as a result most of them were working towards pleasing those in government.

“The putting of directors on contracts is not working to the benefit of Zesco because these people spend more time preparing for their future at the expense of the company in an event that their contracts are not renewed,” he said.

He also bemoaned the increasing gap between the employees and senior management because it was making it difficult for the company to meet its organizational goals.
“The issue of employee motivation should be addressed urgently because we cannot have a situation where workers have had no salary upward adjustment for five years,” said Mtayachalo.

He said unbundling of Zesco was likely to improve efficiency but the negative consequences would be too high to bear because the cost of electricity would be high.

“While unbundling is likely to improve efficiency, the negative consequences will be to high to bear because the cost of electricity will be high since the supply or distribution chain will be longer hence pushing up the cost of power,” Mtayachalo said. “Unbundling of Zesco will result in creating two or three separate companies which will work towards maximization of profits and pass their overheads to a consumer.”

He said what was needed at Zesco was to restructure the management system so that the company could effectively address current problems of power deficit.

“Currently Zesco is operating below capacity and this is not an appropriate time to unbundle Zesco but there is need to restructure everything even board members should be appointed on merit,” said Mtayachalo.

Recently the Zambia Association of Chambers of Commerce and Industry (ZACCI) advised government to unbundle Zesco so that generation, transmission and distribution could be separated in order to enhance efficiency.

“The objective behind the unbundling of Zesco is that it will become more efficient through specialization of operations by separating the generation, transmission and distribution activities,” stated ZACCI. “This development will also reduce on bureaucracy in operations that will lead to an improvement in overall operations and it will also result in greater accountability since ordinary people and the business community will benefit from the consistence and reliable supply of electricity.”

Labels: NESAWU, ZESCO

posted by MrK @ 4:38 AM