THE Industrial Development Corporation (IDC) says it concerned with deliberate falsehoods and misinterpretations published by Mbita Chitala.
And IDC says there were no attempts to strip any of ZESCO’s assets.
Reacting to Mbita Chitala’s book in a statement, Thursday, IDC Head Corporate Communication Namakau Mukelebai said the former ZESCO Board Chairman opted to use the book for personal attacks on the leadership of the Corporation and to malign it’s integrity through blatantly false claims.
“The Industrial Development Corporation (IDC) has noted with deep concern the deliberate falsehoods and misrepresentations published by the former ZESCO Board Chairman, Dr Mbita Chitala, in his book “Corporate Capture: The Political Economy of Electricity Management in Zambia”. We are dismayed that, rather than using the book to add value to public and academic discourse on the better management of State-owned Enterprises in Zambia, the former ZESCO Board Chairman opted to use it for personal attacks on the leadership of the Corporation and malign the integrity of the IDC through blatantly false claims. The IDC believes that publications such as books must be above board and contain true, accurate and objective content if they are to add value,” read the statement.
And Mukelebai said there were no attempts to strip Zesco’s assets.
“Contrary to his allegations, there were no attempts to strip any of ZESCO’s assets nor were IDC’s disagreements with the ZESCO Board Chairman personal in nature. The IDC’s interactions with, and directives to ZESCO are well documented and therefore, the former Board Chairman’s claims in his book are easily disprovable. Further, his assertions on management fees are false, as the issue was addressed by the Attorney General who guided ZESCO that the introduction of management fees by IDC for services it provides to its subsidiaries as a holding company, was legal and they should be paid in accordance with modalities agreed upon in the Management Services Agreement,” Mukelebai said.
She said Chitala was appointed by the board and not through a Presidential appointment as he claimed.
“Dr Chitala twice accepted his appointment to the ZESCO Board by the IDC, contrary to his claims that they were Presidential appointments. He served as ZESCO Board Chairman from June 2017 to December 2020 and the facts are as follows: ZESCO’s losses grew by five thousand four hundred and eighty-one per cent (5,481%) between 2017 and 2020. Similarly, in the same period the solvency of the company dropped by four hundred and nineteen per cent (419%), seriously endangering the solvency of the largest power utility in the country. ZESCO’s liabilities grew by two hundred and one per cent (201%) between 2017 and 2020. Moneys owed to Independent Power Producers (IPPs) increased from US$642 million to US$1.14 billion in the same period,” she said.
“Administration costs grew by one hundred and ninety-six per cent (196%) while Financing costs grew by one hundred and eighty-six per cent (186%). Further, borrowings increased by one hundred and ninety-nine per cent (199%) in the period 2017 to 2020. No programme designed to unlock value from ZESCO’s assets was implemented to address the challenges of debt and long-term sustainability of the Company. Between 2017 and 2020, customer growth declined from 12% to 5% per annum. The above facts and other unethical corporate governance practices underpinned the deep concern the IDC had on the performance of ZESCO under the tenure of the former Board Chairman and influenced the decision to terminate his Chairmanship of the ZESCO Board on 3rd December 2020.”
Mukelebai said Zesco actually recorded a profit in 2021.
“Only after the termination of his membership on the ZESCO Board did ZESCO develop and begin implementing a five-year Turnaround Strategy which was endorsed by both the IDC and the Government and the results are visible.
Since December 2020, ZESCO has gone on to record a profit for the year ending December 2021 after five straight years of losses, solvency has improved by two hundred and sixty-nine per cent (269%), liabilities have reduced by one hundred and sixteen per cent (116%), borrowings have reduced by one hundred and twenty-eight per cent (128%) while administration costs have reduced by K600 million. Further, customer growth for 2021 has grown by 8% with 98,549 new customers added to the ZESCO grid since 2020,” Mukelebai said.
“This positive performance represents a sharp turnaround underlined by positive leadership of the company. This is the performance we expected from the leadership of the Board. The IDC will not be satisfied with Boards that do not drive high performance in its subsidiaries irrespective of the ideological perspectives of its appointees. We expect former and serving Board members to uphold the honour of serving on the Boards of Companies ultimately owned by the Zambian people, as it is a privilege and not a right.”
Meanwhile, Mukelebai said IDC was consulting with key stakeholders and its lawyers on additional action that could be taken.
“IDC therefore frowns upon unethical practices by members of the Board in its subsidiaries. We note that some of the information published in the book is in fragrant violation of his fiduciary responsibilities as a Director as enshrined in the Companies Act and underlines the deep concern IDC had over the Corporate Governance practices that were taking place in ZESCO. The IDC is consulting with key stakeholders and its lawyers on additional action that could be taken, and the public will be informed accordingly. We urge the public to disregard the claims against IDC in the former ZESCO Board Chairman’s book,” stated Mukelebai.
“We are confident that the new Board and Management of ZESCO will continue on a positive performance trajectory and adhere to high levels of corporate governance. IDC remains committed to its mandate of transforming State-owned Enterprises to be profitable and dividend-declaring, and it has confidence that the Board and Management of ZESCO is well positioned to drive this transformation agenda, which should result in improved service delivery, reliable power supply and growth of the energy sector.”