• Dr. Chitala twice accepted his appointment to the ZESCO Board by the IDC, contrary to his claims.
• He served as ZESCO Board Chairman from June 2017 to December 2020.
• Since December 2020, ZESCO has recorded a profit for the year ending December 2021 after five straight years of losses.
Industrial Development Corporation (IDC) has dismissed what it terms as misrepresentations published by former ZESCO Board Chairman, Dr. Mbita Chitala, in his book.
In a statement, Corporation Head of Corporate Communication Namakau Mukelabai said contrary to Dr. Chitala’s allegations, there were no attempts to strip any of ZESCO Limited’s assets and IDC’s disagreements with the ZESCO Board Chairman personal in nature.
Ms. Mukelabi noted that 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.
“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 5,481% between 2017 and 2020. Similarly, in the same period the solvency of the company dropped by 419%, seriously endangering the solvency of the largest power utility in the country.”
“ZESCO’s liabilities grew by 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. Administration costs grew by 196% while Financing costs grew by 186%. Further, borrowings increased by 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,” she noted.
She however said since December 2020, ZESCO has recorded a profit for the year ending December 2021 after five straight years of losses, and solvency has improved by 269%, liabilities have reduced by 116%, borrowings have reduced by 128% while administration costs have reduced by K600 million, with customer growth for 2021 rising by 8% with 98,549 new customers added to the ZESCO grid since 2020.
“This positive performance represents a sharp turnaround underlined by positive leadership of the company. This is the performance the IDC 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.”
“The IDC notes that some of the information published in the book “Corporate Capture: The Political Economy of Electricity Management in Zambia,” 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.”
Ms. Mukelabai said the Corporation is consulting with key stakeholders and its lawyers on additional action that could be taken, and the public will be informed accordingly, urging the public to disregard the claims against the IDC in the former ZESCO Board Chairman’s book.