‘Zim-dollar switch costs Zesa US$4 billion in losses’

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By Costa Nkomo

CASH-STRAPPED power utility, Zimbabwe Electricity Authority (Zesa) has been prejudiced of billions worth of potential revenue following the June abandonment of the multi-currency system by government.

This was said Friday by Group Financial Director Elia Chikwenhere while giving oral evidence before parliament’s energy committee .

Chikwenhere said the volatile USd-Zimdollar exchange rate has not been too kind to the troubled entity.

Under SI142/2019, the local currency was declared sole legal tender in the country, something seen as an advantage to foreign currency earning companies and individual rate payers who owed ZESA.

These could simply go onto the black market to exchange their foreign currency for the local one at very high exchange rates.

Because of that, power tariffs pegged in local currency became the cheapest in the region.

Chikwenhere told MPs that the exchange rate has left ZESA counting huge losses.

“We also have problems relating to the exchange rate itself because we have huge loans, more than US$600 million. So, for importing purposes, there are finance costs attached to the loans, each time there is movement there are exchange losses.

“So, as I’m talking, we now have exchange losses amounting to US$4 billion.

“So, the figures that I expect to see at the end of this financial year are quite horrendous. We just have to manage the situation but we have to manage it through the tariff adjustment formula.

“The discontinuing of the multi-currency system has introduced another dimension. We have loans which require to have extro accounts and extro accounts require to have US dollars,” Chikwenhere said.