ZESCO Owes ERB K107 million in Unpaid Licence Fees

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State owned Energy giant, Zambia Electricity Supply Corporation (ZESCO) owes the Energy Regulatory Board (ERB) about K107 million in unpaid license fees. The owed amounts in license fees is on the increase as the balance that was owed to ERB for the financial year ended 31st December 2015, was K71,751,256 but this amount keeps ballooning through 2016 and 2017.

This was revealed by Acting Auditor General Ron Mwambwa in his final audit report made available to the Zambian Business Times (ZBT). Mwambwa stated in his report that ” a review of the audit findings in August 2017 revealed that the outstanding amounts in licence fees owed by six (6) licence holders had increased to K109,654,366 and that ZESCO Limited owed 98 percent of the debt.

The Auditor Generals audit has also unearthed the possibility of rampant Under Declaration of Sales Volumes by Oil Marketing Companies (OMC’s). The audit team comparison of the ERB statistical data and fuel sales returns submitted by five (5) OMC’s revealed that the volume of sales for gasoil, low sulphur gas oil and unleaded fuel with sales value of K5,266,831 was under declared in some months submitted in the monthly revenue returns resulting in underpayment of ERB Licence fees amounting to K36,868.

The innefficient operations of ERB were also exposed as the energy regulatory agency has Unreliable Procedures on Capturing ERB Licence Fees on Lubricants. Mwambwa stated that “A review of procedures used in capturing sales of lubricants revealed weaknesses in controls in that retailers of lubricants such as auto spares shops that are independent of OMCs did not submit returns and as such did not pay ERB licence fees”

“Further, there was no evidence such as monitoring reports to show that ERB monitors the dealers of lubricants for the purposes of confirming the remittance of ERB licence fees on lubricants. In this regard, it was not possible to ascertain the correct quantities imported and fees paid by the dealers” stated Mwambwa in his audit report.

ERB was also found wanting with notes failure to reconcile the OMCs Sales and ERB Licence Fee Remittances “According to the information provided at ERB in respect of OMCs sales and ERB Licence fee remittances submitted during the period under review, payments of ERB Licence fees were based on information provided by OMCs and not verified figures by ERB”, stated the report.

The above weaknesses show that ERB and the Ministry of Energy, despite delivering above target revenue collection has room to even contribute more to the treasury. The need for the efficient operations of both ministry’s and state regulatory agencies will ensure that the country avoids contracting debts when funds can be raised locally. Additionally, it will also aid to step corruption, real or perceived that these uncollected funds end up in the pockets of government workers and officials.

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