EDITORIAL COMMENT: Zesa’s electricity freebies need rethink

ZESA-megawatt-house-cues1There is not much wrong with Zesa Holdings giving its employees and pensioners free electricity each month, although we think there might be a better way of boosting pay and pensions, but there is something wrong with the scale of the benefit.

Many businesses making or supplying goods or services have similar perks for staff and with the destruction of a high fraction of all pension funds during hyperinflation, giving free electricity to pensioners could be considered meritorious.

Certainly there is no reason to treat a former employee who gave a lifetime of service to Zesa differently from a present employee.

But what we find astonishing is that Zesa gives $160 worth of electricity a month to every employee and every pensioner, far more than even large households in Helensvale might use, let alone the average family.

In fact, few families spend more than $40 a month and that figure, or something close to it, should be the perk if Zesa wishes to continue giving free electricity.

Much more than this figure implies, the recipient is either selling electricity illegally to neighbours or running some sort of business; even if running a legal business they should pay normal commercial rates.

Better still would be to convert the perk to cash, giving every Zesa employee an extra $40 a month, perhaps calling this an electricity allowance, and passing on similar sums to the pension fund to top up pensions for those who have retired from Zesa.

The cost would be the same for Zesa, yet everything would be very transparent and the 5 000 employees and pensioners of Zesa would have the same incentives the rest of us have to moderate consumption.

Giving in kind is sometimes necessary. A supermarket may well allow staff to take home unsold food that has hit its “sell-by date” for personal consumption that night; the option would be to dump the food. A shoe maker or appliance maker might want staff to do intelligent product testing; a dressmaker might want staff to be walking advertisements. But this is not the case with Zesa and so the benefit could be converted to money. But whether Zesa wants to give the benefit in cash or kind, the figure should reflect what a family uses, not some multiple of that figure.

The free $100 of electricity a month to staff of the Ministry of Energy and Power Development is far more difficult to justify. Not only is the sum too high, but the ministry is supposed to keep a watchful eye on Zesa, not be getting favours from Zesa. It is difficult to monitor your friends.

And such a benefit is uncommon. After all, staff in other ministries do not get free perks from State-owned enterprises.

We have yet to hear of Finance Ministry staff having tax credits, or Mines Ministry staff getting the odd free truckload of coal or a monthly diamond.

The biggest single problem with the Zesa benefit is that, as often with these sort of things, there was little transparency.

It has now come out into the open and the scheme needs to be modified to reflect reality, or better still converted to cash benefits for staff and pensioners only.