THE Bulawayo City Council has rekindled its fight to block power utility, Zesa, from grabbing its power station without paying compensation.
The parties clashed after Zesa proposed to take over the facility in 1987 and refused to pay compensation arguing that it was a government entity. The power station has an installed capacity to generate 90MW.
According to the report of a meeting held on January 6 this year, the council resolved to authorise acting town clerk, Sikhangele Zhou to negotiate the compensation for the power station and any other properties in Zesa’s possession that were still registered under the City of Bulawayo.
“That in the event that Zesa is not willing to compensate, the acting town clerk be authorised to instruct the city lawyers to defend the takeover in court.”
The council-owned power station, became part of Zesa in 1987 after the amalgamation of all local authorities’ electricity undertakings.
Zesa used to pay the local authority but halted the payments under unclear circumstances.
“The amalgamation had brought into focus the questions of compensation of the council’s assets to be taken over by Zesa.
“However, the matter was never discussed in greater detail because the focus was now on how Zesa was going to compensate local authorities from loss of revenue,” read part of the report tabled by Zhou before the general purposes committee.
Negotiations between council and Zesa officials began in September 1985 and dragged on for months before the former sought the intervention of the Local Government ministry to intercede and ensure the local authority received fair compensation for its assets.
“The city’s assets related to the electricity undertaking then were worth some $63 million of which $26 million was outstanding in loans. However, there was no compensation. The reason given was that Zesa would operate as a government agent and beneficiaries would still be the same and therefore, there was no need for compensations,” a council report read.
Zhou said on December 8, 1987, Zesa agreed to the principle of a 5% surcharge on electricity compensation.
But Zesa paid the 5% until 1994 before it unilaterally decided to stop payments after they received a directive from the Energy ministry to stop paying the 5% to local authorities because it was making electricity expensive and distorting bills.
Zesa advised local authorities to collect the money on their own, but this was not possible because that would have meant installing two meters per household.
This allegedly led to the four affected local authorities dragging Zesa to the High court in 1995 and they won the case.
“However, before the order was implemented, an out-of-court-settlement was reached and both parties agreed on a formula of calculating the royalties,” read the report.
They then resumed the payments until 2008 when the conversion rate reduced the figure to nothing.
“ln 2009, council tried to engage Zesa to resume the royalties in view of the introduction of the multi-currency system but Zesa is not willing to pay. To date there is a standoff between Zesa and council on the issue of royalties.”
Zhou said during royalties negotiations, the compensation issue was “kind of parked and no conclusion was arrived at”.
“It was, however, apparent that this matter had not been concluded and for Zesa to simply take over without compensation was a clear case of unjust enrichment. This was our chance to fight for what rightfully belongs to us. We cannot just hand it over for nothing.”