Power utility set for commercialisation

The Zambian government, the International Monetary Fund (IMF) and the World Bank have reached an agreement to commercialise, rather than privatise, the state-owned Zambia Electricity supply Corporation (ZESCO). Commerce and Trade Minister Dipak Patel said in a statement last week that commercialisation would maximise profits and save jobs. The IMF also welcomed the decision and said they believed once ZESCO was commercialised, the company would operate like a profit-making corporation, devoid of government interference. "What this essentially means is that the government will not sell any of the shares of the state-owned ZESCO to a foreign investor. They will cede complete control of the company to an independent, competent chief executive, appointed by an independent board of directors... Such people cannot be expected to do the government favours, like the case was in the past," IMF Country Representative Mark Ellyne told IRIN. Under former president Fredrick Chiluba, the coffers of the power utility were at times used to fund ruling party activities and pay civil servants' salaries. Donor funding for Zambia has been conditional on the government sticking with a privatisation programme that began in 1992 and has placed more than 250 state-owned companies - many of them previously loss-making - in private hands. However, privatisation has been criticised by the unions as a recipe for retrenchment. President Levy Mwanawasa recently also questioned the social impact of the programme in a country where only 11 percent of the labour force is in formal employment. He said the government would like to examine alternatives. "Our past experience has been that privatisation has brought about misery and job losses. If we privatise ZESCO, people in rural areas may never get electricity because such a move would not be profitable to a private company," Mwanawasa told journalists in March. ZESCO employs more than 3,500 full-time staff and some 1,000 casual workers, according to Angela Chifire, the company's spokeswoman. Most of the workforce are expected to keep their jobs following the decision not to privatise the company. Ellyne said before commercialisation can take place, the IMF, World Bank and the government would have to approve a "serious" business plan. Chifire told IRIN that ZESCO is currently exporting power to Namibia, the Democratic Republic of Congo, Botswana and Tanzania.