BCC demands US$60 million for power station

Source: BCC demands US$60 million for power station | Sunday News (Business)

Vusumuzi Dube, Online News Editor
THE Bulawayo City Council (BCC) has insisted that they will only part with the title deeds of the Bulawayo Power Station if the Zimbabwe Power Company (ZPC) concedes to pay US$60 million in royalties.

Zimbabwe Power Company

The two institutions have been engaged in legal battles over the ownership of the power station with the local authority claiming that the power utility was legally its tenant. According to a council confidential report, the local authority has since given the Town Clerk, Mr Christopher Dube, the greenlight to engage the power utility but insists on the US$60 million royalty payment.

“Council was invited to a meeting by the Permanent Secretary in the Ministry of Local Government and Public Works which was co-chaired with the Ministry of Energy Permanent Secretary to discuss the power station matter. The meeting resolved that the parties should engage each other and that Zimbabwe Power Company should make a commitment that they were prepared to pay compensation, a document was drafted in which parties were to sign, committing each party to doing everything possible to ensure that transfer and compensation was negotiated to ensure that the refurbishment project was not jeopardised,” reads the report.

However, it has emerged that the power utility tried to push the local authority into transferring the power station ownership before any negotiations through the signing of a Memorandum of Understanding, which the local authority rejected, noting that they would not have any leverage when conducting the negotiations once they hand over the site.

“On the issue of transfer of the Power Station, the Electricity Act Chapter 13:19 stipulated that all power stations in the country shall belong to Zesa Holdings. Council should now consider issues of compensation and payment of royalties in perpetuity. The royalties would be a source of revenue to Council. Currently Zesa Holding was owing Council ZWL $3 billion while Council owed ZWL $2,1 billion in bills. The Town Clerk also advised that four local authorities had power stations in the country. ZPC was targeting transfers in all of them. Transferring of the power station to ZPC was ideal. Council would get compensation estimated at US$60 million and royalties in the perpetuity. There was a need to recast the wording of the Memorandum of Understanding,” reads the report.

In debating the matter, councillors felt there was a need not to rush to transfer the ownership of the power station before resolving the issue of compensation. Councillor Tawanda Ruzive felt that council should consider getting into a tripartite partnership for the generation of electrical energy. In this case he said the council would provide the power station but did not support its total transfer to ZPC.

“Mayor, Clr Solomon Mguni noted that council allowed ZPC to continue operating the power station while awaiting the completion of court processes. This arrangement was good enough to allow Zesa Holding to acquire the required funding from investors. He did not see the need to sign the MoU for negotiations to take place,” reads the report.

Mayor Clr Solomon Mguni

At one point the ZPC also emerged with their own set of tittle deeds, which saw them even making moves to demolish two of the cooling powers at the power station arguing that they had outlived their lifespan, a move that was met with opposition from residents who noted that the towers were part of the city’s notable landmarks.

It was not clear how the ZPC got to have the title deeds as the power station was constructed and fell under the jurisdiction of the local authority until 1987 when Zesa was given the sole mandate of power generation in the country, taking over from local authorities.

ZPC was then required to pay royalties to the local authority, a matter which has also been subject to controversy after the power utility reneged in paying the royalties to the council.

According to the Zimbabwe Electricity Supply Authority (Zesa) Holding’s website the Bulawayo power station is connected to the national grid through the 11 kilo-voltage and 33 kilo-voltage systems.

“The plant was commissioned between 1947 and 1957 as an undertaking by the Municipality of Bulawayo. It joined the Zimbabwe Electricity Supply Authority in 1987 after the amalgamation of all the Local Authority Electricity Undertakings, the Electricity Supply Commission power station at Munyati and Hwange, and the Central African Power Corporation station at Kariba.

“While Bulawayo Power Station initially had an installed capacity of 120 megawatts, a refurbishment exercise in 1999 on the ageing plant gave it a new lease of life. The station capacity is now 90 megawatts. The main materials needed for the generation of electricity are coal, water, chemicals, oil, greases and spare parts for maintenance. The station currently generates an average of 30 megawatts,” the website says.

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