HARARE - The Zimbabwe Power Company (ZPC) plans to embark on a debt restructuring exercise, with the group floating a tender seeking a “strategy consultant”.
The energy company — a subsidiary of power utility Zesa Holdings — is currently battling to pay a four-year-old $12 million debt owed to coal miner Makomo Resources, among other obligations.
Market analysts said the move could be part of ZPC’s efforts to clean up its balance sheet and make it attractive to financiers.
The tender will close on March 19, 2015.
However, ZPC had not responded to questions, seeking to establish the company’s total debt and what the restructuring strategy would entail, by time of going to print.
This comes as last week, ZPC managing director Noah Gwariro told Parliament that the company was owed
$558 million by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) — a situation that has delayed expansion of power stations.
“As at February 2015, ZETDC owed us $558 million and the majority of the debt is over 120 days, and non-payment of this debt has resulted in ZPC not paying suppliers,” he said, adding that “this has increased our operational costs and has negatively impacted on the rehabilitation of plants.”
Gwariro highlighted that ZPC had engaged ZETDC to take measures to increase collection of electricity bills, adding ZETDC creditors were being ranked in order of priority, discounts being given for off-payments, and negotiable payment plans being offered.
Last October, Makomo Resources general manager Sam Mabvira said his company used to deliver 150 000 tonnes of coal a month at Hwange Power Station (HPS) — operated by ZPC — but was forced to lower the volumes to 80 000 in 2013 owing to cash flow challenges that were being faced by the power utility.
However, the deliveries have since June last year risen to between 100 000 and 120 000 a month following a request by ZPC to up the volumes to be supplied at the power station.
“ZPC owes us about $12 million for the coal orders we have delivered at HPS.
The non-payment of this debt is affecting us as it has led to the stopping of the fuel allocation facility which we enjoyed with Engen whereby we used to pay after an agreed period,” said Mabvira.
“However, we failed to meet the deadline for the payment of the fuel supplied to us resulting in Engen closing this facility,” he said.