THE Zimbabwe Electricity Transmission and Distribution Company (Zetdc) is failing to account for millions of dollars in revenue, due to a porous client payment system, with perennial losses casting the parastatal into operational uncertainty.
ZETDC, a subsidiary of the Zimbabwe Electricity Supply Authority (Zesa) Holdings, is responsible for the transmission of electricity from power stations and retailing to end users.
Findings by acting Auditor-General (AG) Rheah Kujinga in her report on State-Owned Parastatals for the year ended 31 December 2022 revealed that the ZETDC’s client payments system was not interfaced with banks, which saw payments amounting to ZW$793.4 million being processed, but not allocated to the respective customer accounts.
In response, the company said the unallocated payments have been caused by direct deposits from customers, which do not have useful supporting customer information.
The organisation has been operating on the brink, with its current liabilities exceeding current assets, a recurrent issue that was flagged by former AG Mildred Chiri in her previous report.
“The Company incurred an operating loss before tax for the year ended December 31, 2021 of ZW$816.02 million (2020: ZW$25.9 billion). The Company’s current liabilities exceeded its current assets by ZW$24.5 billion (2020: ZW$47.5 billion) as at December 31, 2021,” reads the report.
“The Company defaulted on repayments of its foreign loans which have not been rescheduled.
“These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.”
ZETDC was also incurring transmission losses ranging from 1% to 5%, in the period under review, above the stipulated limit of 14% on units of electricity sold, versus the units of electricity purchased, with no evidence to support an investigation into the variances.
More irregularities have been revealed, with the company failing to review payslips and payroll summaries, which has seen it process fuel and electricity allowances to employees, contrary to its human resources policy, which stipulates that an employee is entitled to one of these benefits, not both.
Kujinga also flagged the ZEDTC for failing to remit the rural electrification levy to the Rural Electrification Fund (REF), with an outstanding balance amounting to ZW$4.3 billion (2020: ZW$1.8 billion), as at 31 December 2021.
“The Company is still failing to take meter readings as per company policy due to short[1]age of operational vehicles. The Company has secured funding through a bank loan facility for the installation of prepaid meters to the remaining approximately 103 000 clients and the installation of smart meters to the large users of electricity,” reads the report.
“Once the projects are completed, in 2022 every customer is either on prepaid meter or smart meter, the issue of meter reading will be a thing of the past. The project is still pending. The meters are expected to be received by end of June 2022 and to complete the installations by the end of the fourth quarter 2022.”
The ZETDC has also been hit by heavy operational constraints that have seen a shortage of vehicles for staff to effectively carry out their duties.
“The company had an ageing fleet of motor vehicles that were experiencing frequent breakdowns. As a result, there was a shortage of operational vehicles to enable staff to perform their duties. For instance, some meters were not read for a period of more than 12 months. This was contrary to the company policy which requires meter readings to be done every three months as the clients are billed using estimates,” reads the report.
The company has been failing to comply with international accounting standards, raising the risk of mis-statement of financial figures.
Reads the report: “The valuation of the property, plant and equipment was performed by Directors as at December 31, 2021. The property, plant and equipment valuations were determined in United States dollar and then translated to Zimdollar using the auction rate as at December 31, 2021.
Although the determined United States dollar values reflected the fair value of the property, plant and equipment in United States dollar, the converted Zimdollar values were not in compliance with IFRS 13 ‘Fair Value Measurement’ as they may not reflect the assumptions that market participants would apply in valuing similar items of property, plant and equipment in Zimdollar.”
Source Thenewshawks
