Brian Chitemba Investigations Editor

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ZESA Holdings’ net liabilities will jump from US$496 million to a jaw-dropping US$1 billion if a long-running back-pay award dispute is implemented, documents at hand show.

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This means Zesa’s credit rating will tumble, making it practically impossible to access lines of credit from local and international lenders. Zesa’s liabilities already exceed its assets.

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Its South African counterpart, Eskom, last year had its credit rating downgraded to Ba1, also known as junk status. At that level, borrowing becomes extremely expensive. Zesa’s situation has been worsened by its 7 000 workforce which is pushing for a back-dated pay award that will chew US$118 million.

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Company spokesman Mr Fullard Gwasira did not respond to e-mailed questions over a fortnight ago despite making promises to do so. But according to a letter to workers on February 24, 2015, Zesa chief executive officer Engineer Joshua Chifamba said if the salary award granted on September 15, 2014 is implemented, the company would plunge into a US$182 million financing gap this year.

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The workers won an arbitral order for a pay increase in 2012, but Zesa did not honour it. The workers sued for enforcement and last year the Supreme Court ordered Zesa to meet its dues to employees backdated to 2012.

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“Implementing the arbitral award will worsen the company’s financial performance. The net liability position which stood at US$496 million in 2012 will worsen to US$922 million in 2015.

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“Management has computed the financial implications that arise from implementing the award. The total back-pay amounts to US$118 million, whilst the incremental payroll cost for the year 2015 is US$68 million, or approximately US$5,7 million per month,” reads the letter.

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The Zesa boss made a settlement offer of US$21 million, which workers have turned down. He had proposed to slash the money owed Grade D2 workers to US$2 442 instead of US$63 177 each, while those in Grade A31 would get US$1 628, down from US$9 585. Those in in Grade B22 would be paid US$1 790 rather than from US$13 541. Mr Chifamba insisted Zesa did not have capacity to meet workers’ demands, although it managed to pay salaries on time in recent months.

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“Employees willing to accept the offer will commence receiving payments at the end of March 2015. This settlement offer will be open for uptake from February 2015 to 15 March 2015.”

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It is understood that workers are planning to take the power utility back to court over the matter. Zesa at one point proposed a 6 percent electricity tariff hike to meet the salary arrears but backed down after a public outcry.