ZIMBABWE’S neighbours have begun to reduce even further electricity supplies to the country because it is failing to make timely payments to clear outsta
The creditors are also doubling the interest payable by Zesa every month.
Mozambique’s HCB, South Africa’s Eskom and the Democratic Republic of the Congo’s Snel have all reduced their electricity supplies to Zimbabwe.
Zesa executive chairman Sydney Gata last week confirmed that the regional players were now demanding advance payment for their power.
Last week the chairman of Eskom in South Africa Reuel Khoza said his company had reduced from 500 megawatts to 115 megawatts the amount it would provide to be paid in arrears, and everything above 115 megawatts now has to be paid for in foreign exchange.
Gata said HCB supplies had been curtailed from 400 megawatts to 250 megawatts for peak period.
“HCB have already secured alternative markets for the power and have asked Zesa to wheel the power,” he said.
“HCB have given notice to terminate supply contract unless a payment plan is put in place. Eskom now demands advance payment for their power. Eskom have classified Zesa an interruptible customer due to payment problems. Eskom are now charging 12% penalty per month for defaulting on payments.”
Zimbabwe’s foreign currency crisis has seriously affected the operations of Zesa, which has also been rocked by several cases of industrial action by disgruntled employees.
The parastatal, which is being commercialised before privatisation, requires US$10,9 million every month to survive.
It needs US$5 million for power imports, US$5 million for debt service, US$500 000 for wheeling charges and US$350 000 for spares per month.
Zesa has arrears amounting to US$109,7 million. It owes HCB US$22 million, Eskom US$11 million, Snel US$5 million, Mozambique’s EDM US$5 million, and Zamiba’s Zesco US$4 million.
The company has on several occasions introduced load shedding because of the electricity shortages, sometimes disrupting the operations at several companies.
The load shedding has worsened further the country’s industrial production capabilities, resulting in firms reducing output levels. Analysts said this reduction affected the availability of consumer goods on the market, leading to a thriving parallel market.
Gata said some of the company’s constraints included an inappropriate tariff structure and lack of a regionally benchmarked tariff that is cost reflective.
“The cost of imported power at US3,1 cents per kilowatt is more than the retail tariff Zesa is charging its industrial and commercial customers in real terms,” Gata said. “There is need for a new tariff adjustment mechanism that reflects the undercurrent economic fundamentals.”
He said Zesa was now unable to access offshore financing because there was no supportive payment mechanism in place due to the foreign currency shortage.
He said some of the parastatal’s future plans included the development of sub-transmission network to support the expanded rural electrification programme with end use infrastructure development.
As far as distribution is concerned, Gata said they were refurbishing, reinforcing and upgrading the national distribution network.
Gata said: “We want to complete Electricity III projects abandoned by the World Bank and the African Development Bank urban works and service various projects.”
He said Hwange 7 and 8 needed to be expanded at a cost of US$368 million.
The project would last about three years.
Kariba South also needed to be extended at a cost of US$175 million.
This project would take about five years to complete.
Mozambique’s HCB was undergoing a US$500 million upgrade and would help Zimbabwe when this was completed in about four years time.
Gata said because the energy situation was critical, Zesa was also upgrading the Gokwe North thermal power station at a cost of US$1,3 million and the Batoka Gorge at a cost of US$1,1 million.
“These projects have long lead times and huge investments hence require regional and international investor support,” Gata said. “The Southern African Power Pool market provides the market for this energy.”