No direct power imports, Zerc tells firms

Shame Makoshori



THE Zimbabwe Electricity Regulatory Commission (Zerc) has rejected requests for direct power imports by several private firms, fearing this could harm re

venue streams for the beleaguered state-owned power utility, Zesa, businessdigest established this week.


The private companies are understood to have sought permission from Zerc, a new power sector regulatory body established in 2005, to import power directly from suppliers in South Africa, Mozambique and the Democratic Republic of Congo (DRC).


This had been prompted by unreliable supplies from Zesa which has dismally failed to meet local power demand due to low generation capacity at its own plants and lack of foreign currency for imports.


However, sources indicated that their requests had been thrown away by Zerc after establishing that the companies would be importing from the same sources as Zesa, and that Zesa could lose significant revenue since the companies form the core of the utility’s key customer base.


Businessdigest could not establish the number of companies that had applied for direct import permits from Zerc, but sources indicated there was a significantly high number, most of them in the manufacturing and mining sectors.


Businessdigest understands that Zerc is of the view that if it allows major power consumers to directly import power, potential investors might be dissuaded from injecting capital into local power generation.


Zerc was established to regulate the sector and promote competition in electricity generation by encouraging private sector participation.


It is working on a restructuring programme to woo foreign investors, but sources said government policy was working against these efforts.


Businessdigest understands that Zerc is now proposing that if the firms are willing to commit foreign currency resources towards power imports, they should be able to pay for their electricity supplies from Zesa in foreign
currency.


This, Zerc believes, would enable Zesa to import enough power to meet local demand since its import obligations had been constrained by lack of foreign currency.


“Major companies such as Sable Chemicals are said to have asked for permission to directly import electricity from Eskom and other regional exporters that are also supplying Zesa but that will kill Zesa,” said a source from the Ministry of Energy, under which Zerc and Zesa fall.


“They were told that this is not possible,” the source said.


Firms that have previously complained about power supply problems include Zimbabwe Stock Exchange-listed mining firms Falcon Gold, Bindura Nickel Corporation and RioZim, formerly Rio Tinto Zimbabwe.


Zesa is going through serious viability problems that have been triggered by acute foreign currency shortages, a parallel tariff structure where it sells electricity at a lower cost than the production and distribution costs.


Utility companies in the region have increasingly become reluctant to supply Zesa with power because of its increased default risk on foreign currency-denominated obligations.


Requests for a comment from Zerc commissioner general Mavis Chidzonga were unsuccessful.

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