ZESA to lose US$300m
THE country’s power utility, ZESA Holdings, is likely to lose more than US$25 million monthly in potential revenue due to an unprecedented electricity supply crisis that has hit the country, the Financial Gazette’s Companies & Markets (C&M) can report.
ZESA chief executive officer, Josh Chifamba, confirmed that monthly revenue would plummet by US$25 million, a figure which translates into an annual US$300 million.
The power utility has been collecting about US$60 million every month from electricity consumers.
But now, due to the intensified load-shedding that has seen towns across the country without power for longer periods, revenue is likely to plunge to about US$35 million per month.
ZESA has cited equipment breakdowns at its power plants and dwindling water levels for electricity generation at Kariba Dam.
“We estimate that we will have a revenue reduction of about US$25 million,” Chifamba told C&M.
Prior to the rollout of the tight load-shedding schedule which has seen electricity only available between midnight and early hours of the morning when most of the users are asleep, the power utility had been implementing shorter load-shedding periods of between five and eight on selected days for different areas.
But now electricity consumers are going without electricity for more than 20 hours daily, with the power utility saying the situation could further deteriorate.
The load-shedding has dealt a blow to the country’s integrated electricity generation and distribution company, which may find it difficult to balance its books.
The development comes at a time when ZESA is faced with a number of challenges.
The power utility has failed to collect more than US$1 billion it is owed by electricity consumers.
The unpaid bills are hampering ZESA’s operations and its viability. According the power utility’s commercial director, Ralph Katsande, the debt from domestic consumers accounted for 29 percent of the debt while industry, local authorities and the commercial sector accounted for 20 percent, 21 percent and 11 percent of the debt respectively.
The farming and mining sectors owed ZESA eight percent and six percent of the debt respectively. Government, parastatals and other institutions owe about five percent of the debt.
This has made it difficult for ZESA to sustain its network maintenance and to service its debts, a development that has led to key creditors threatening to withdraw their services.
This situation has been made worse by the fact that electricity supplies to households and industries have plunged by about 300 megawatts due to dwindling water supplies for power generation at Kariba Dam following poor rainfall in the Zambezi basin.
The Kariba Hydro Power Station has been producing relatively cheap and reliable electricity for the country but is now no longer able to perform to its optimal due to reduced water availability.
About 60 percent of Zimbabwe’s electricity supplies have been from Kariba, which has been producing power at an average cost of US$0,02 cents per kilowatt hour (kw/h).
The balance of about 40 percent of electricity has been generated from thermal power stations in Hwange, Munyati, Bulawayo and Harare at an average cost of between US$0,08 cents and US$0,16 cents per kilowatt hour. Inefficiencies in the running of these thermal power stations, associated with ageing equipment make the domestic production of electricity relatively expensive compared to regional counterparts.
This has led to the power utility charging a relatively high final tariff of US40,986 cents per kw/h to electricity consumers, which is a blend of hydro and thermal power stations costs.
In terms of distribution, industrial and commercial charges in Zimbabwe are relatively expensive at around US$0,0983 cents and US$0,1272 cents per kw/h compared to regional average of US$0,035 cents and US$0,076 cents per kw/h respectively.
Such a development has rendered Zimbabwe’s commercial and industrial activities less competitive. In addition, inefficiencies by commerce and industry in the use of power has worsened the situation.
To increase competitiveness in the country’s productive sectors, the blend final tariff levied on productive sectors should consist of a higher proportion of hydro generated power vis-a-vis thermal generated power.
However, reliance on hydro power would also have to take account of challenges that arise in periods like now when rainfall patterns impact on water flows into Kariba.
There is also a compelling case to refurbish the transmission and distribution networks to minimise the high losses.
The unprecedented load-shedding has been prompted by the unrelenting power crisis due to poor rains in the Zambezi River basin.