Zim power crisis to worsen
ZIMBABWE could fail to secure electricity imports from its major supplier, Hydro Cahora Bassa (HCB), after the Mozambican firm demanded cash upfront from ZESA Holdings for power imports, the Financial Gazette’s Companies & Markets (C&M) can exclusively reveal.
Failure to raise money for electricity imports is likely to lead to extend periods of programmed blackouts triggered by insufficient local electricity generation.
There are fears that unexpected disruptions in the country’s economic activities caused by plant breakdowns due to ageing would also worsen.
The power utility’s commercial director, Ralph Katsande, exclusively disclosed to C&M that ZESA was now required to pay about US$3,5 million upfront monthly for the supply of 50 megawatts (MW) of electricity from HCB to mitigate the effects of poor domestic power generation.
“We have a firm power purchase agreement with HCB to supply us with 50MW of electricity,” said Katsande adding that: “But now, we are required to pay cash upfront amounting to US$3,5 million monthly for them to supply us .”
ZESA and HCB entered into a firm agreement to have the Mozambican power utility supply 50MW.
The country’s integrated electricity generation and distribution company had been finding it difficult to service its debt to HCB over the years, which had initially been at about US$100 million.
Two weeks ago, this paper, reported that the company had cleared its debt with the Mozambican power utility, after it realised HCB could cut supplies anytime.
Now, it appears HCB, after realising that ZESA has been struggling to service its debt, is now demanding that Zimbabwe pays cash upfront before the Mozambican power utility can supply the agreed 50MW.
To worsen matters, the power utility is struggling to collect over US$1 billion owed by electricity consumers, making it difficult for ZESA to get cash to pay HCB, the remaining regional power utility supplying the country with electricity on a firm arrangement, upfront on a monthly basis.
This new arrangement is likely to worsen the supply of electricity in the country at a time when the power utility is also struggling to generate adequate electricity for the country, undermining an economy tottering on the brink of collapse.
Captains of industry and commerce have indicated that poor electricity supply was one of the major factors causing poor productivity and increased capacity utilisation within the industrial sectors.
The farming sector, particularly wheat growing, has also suffered significantly from intermittent power supplies.
Sometimes ZESA gets electricity supplies from other regional power utilities on non-firm agreements.
These include Zambia Electricity Supply Corporation and Eskom of South Africa.
But these have lately been experiencing supply deficits in their own markets, with South Africa’s power utility, Eskom, cutting supplies to domestic users as it battles to repair ageing power plants.
Reports from Zambia suggest that dwindling water reserves at hydropower dams that provide nearly all of Zambia’s electricity could force grid operators to cut power supplies by 30 percent to the country’s copper mines, the mainstay of the economy.
Zimbabwe has been experiencing massive load-shedding across the country owing to low power generation from the country’s five power stations.
The power utility operates five power stations namely Hwange, Kariba, Munyati, Harare and Bulawayo.
More than a decade of economic collapse left the power stations in disrepair, with generators operating well below their capacity.
The country is currently generating about 1 000MW of power against a national demand of about 2 200MW of electricity at peak periods.
In order to mitigate this deficit, ZESA has relied on electricity imports from HCB to supplement local supplies that are failing to meet demand.
Realising that the country was not getting enough imports to augment supplies, the power utility resorted to increased load-shedding.
However, government through the power utility is working to close the electricity deficit in the country through several projects that include the expansion projects at Kariba South Power Station and Hwange Power Station.
The electricity situation has serious repercussions on the recovery of the economy’s productive sectors of manufacturing, agriculture, mining and tourism, which government wants to drive economic recovery.
Presently, most households and industries in Zimbabwe are subjected to longer hours of load-shedding daily.