Zesa incur costs for idle equipment

Home » News » Zesa incur costs for idle equipment

Zesa Holdings continues to record huge costs in storage of equipment bought from an Indian company under a deal that is currently under probe.

The equipment used to manufacture transformer was supplied to ZENT Enterprises, a subsidiary of Zesa, which handles the manufacturing of transformers meant for domestic use as well as export. The equipment bought from India was part of a $16 million cargo delivered to ZENT without raising orders for it or specifications to suit project needs.

The power utility, left in agony after its request for a 14,69 percent increase in the power tariff was rejected by the regulator, this week said tight fiscal latitude will put the group under financial strain.

But Zesa has continued to spend huge amounts of money annually in demurrage fees for idle equipment worth of millions of dollars whose fate remains uncertain.

A reliable source said the Energy and Power Development Minister recently demanded to be given details concerning procurement transactions since 2005, which also include the deal with PME of India.

“The ministry requested details of all transactions starting from 2005, but did not indicate for which particular period. We gave them everything, but some not in detail,” said the source. There still is stock of the equipment supplied by PME. Part of the equipment is still at the warehouse owned by ZENT, but the warehouse is manned by ZIMRA,” the source said.

While ZETDC, ZESA’s transmission and distribution subsidiary, would purchase the equipment, it either lacks capacity to purchase the equipment or cannot find use for the equipment. While the matter has not been handled exhaustingly, reliable sources said the circumstances and manner in which the deal was signed showed total disregard of rules and corrupt tendency involving senior executives.

According to the auditor general’s report there is possible connivance between officials from both firms to benefit from the multimillion dollar.

It is alleged that the officials took advantage of an agreement involving transfer of technology between ZENT and PME, which was to run up to 2010, but was extended by a another five years.

Ms Chiri said that there were a number irregular features in the deal, among them supply of equipment outside of amounts raised in specific orders.

“These extra goods are for projects which have not commenced or are not on order. This has resulted in the creation of a consignment at Ardbennie location to cater for these items,” she said. While ZENT received equipment not ordered for and paying demurrage costs for their storage, PME would also send official to Zimbabwe, with the power utility meeting their travel costs.