The Industrial Development Corporation (IDC) has directed Zesco to restructure the company by streamlining operations and reduce the current workforce as well as review worker conditions of service.
According to a statement issued by IDC public relations manager Namakau Mukelabai, Wednesday, Zesco has also been directed to suspend employment of new staff and freeze all vacant positions unless in exceptional circumstances.
“Industrial Development Corporation (IDC), has directed the Board of Directors of the national power utility company to take bold and meaningful measures that will transform the company into
a viable enterprise. At the Annual General Meeting (AGM) held in Lusaka, the IDC representatives
restated the directives on transforming ZESCO which were issued by the Group Chief Executive Officer, Mr Mateyo Kaluba to it’s Board and management. IDC directed the Board and management of ZESCO to re-examine its strategies, operations and structures, in order to identify and implement measures to turn
around the company. The shareholder through its proxy, Mr David Kombe, Chairperson of the Finance
Committee of the IDC Board and Mr Isaac Ngoma, Chairperson of the Audit and Risk Committee, emphasized that ZESCO’s situation required urgent measures to transform the company,” Mukelabai stated.
“The shareholder further directed the suspension of employment of new staff and freezing of all vacant positions unless in exceptional circumstances; restructuring the company by streamlining operations and reducing on current workforce including abolishing or merging of functions or departments; review of all planned adjustments in salaries which should be linked directly to both individual and overall performance of the company. In addition, IDC expects a comprehensive review and restructuring of conditions of service particularly for those in management such as travel on company business,
communication, provision of personal to holder vehicles, access to company products and services and any other such conditions that can be abolished, suspended or re-packaged to achieve significant cost reductions.”
Mukelabai stated that other directives included: the suspension of planned expenditure on non-core
activities; the suspension of any investments in projects or programmes not directly aligned to the efficient and effective delivery of electricity and the suspension of all international travel for training, conferences or seminars for a defined period.
“Exceptions may be given for key international meetings in which ZESCO’s participation is critical to the company’s performance. During the AGM, the shareholder further raised concern at the pace at which ZESCO
was facilitating the implementation of Renewable Energy projects. IDC said in light of the more than 300MW power deficit currently being experienced, it was prudent that ZESCO took the lead in facilitating power generation for the country through renewable energy sources. They also called upon the ZESCO Board to examine the feasibility of divesting from some of its investments with a view to meeting its debt
obligations and improve its balance sheet,” she stated.
Mukelabai stated that in response, ZESCO Board Chairperson Dr Mbita Chitala acknowledged the
problems the company was going through, one of which was refinancing of its debt owed to Independent Power Producers (IPP) and settlement of arrears to suppliers.
“He stated that ZESCO was in the process of raising a US$500 million bond to be used for settlement of the portion of the debt. ZESCO also acknowledged the shareholder directive to explore options regarding its investment in subsidiaries and assured the IDC that the Management has been tasked to conduct a study to enable the Board to make the necessary decisions. Additionally, ZESCO had already commenced carrying out other reforms and transformational programmes of the company as directed by the shareholder,” she stated.
And Mukelabai stated that IDC Group Chief Executive Officer Mateyo Kaluba observed that while ZESCO’s challenges were compounded by the operating environment in which the tariff structure was not cost-reflective, it was necessary that the Board and management were seen to also take strong measures that
demonstrated they appreciated that the company needed to live within its means.
“We look forward to a time when ZESCO will sell power at a tariff that reflects the price at which it buys or produces the power. We are confident that the Government appreciates ZESCO’s predicament and therefore the necessary reforms will be implemented to enable ZESCO thrive and contribute more effectively to national development. On our part as IDC, we will work on ensuring that those Independent
Power Producers whose tariffs are not in line with the tariff at which Industry buys
power from ZESCO are revised,” Mukelabai quoted Kaluba as saying.
He further implored the Board and management to actively engage the unions as it deals with the matters raised during the AGM, taking into account the reality of the situation the company was in.
Meanwhile, Kalaba also directed all companies in the IDC Group which made losses in 2018 to implement cost reduction measures.
Affected companies are Zambia Railways Limited, Zambia Daily Mail Limited, Times Printpak Limited, Mulungushi Village Complex Limited, Mukuba Hotel, Mulungushi International Conference Centre Limited, Nitrogen Chemicals of Zambia and ZAMTEL.