Politics plunge Zesa into darkness

Vincent Kahiya

AT the Zimbabwe Electricity Supply Authority (Zesa)’s Harare Power Station there are three shifts of workers manning the plant which was built to ensure the capital is not affected by power failure at the country’s main generation plants. There are al

so people working round the clock at smaller thermal stations at Munyati in the Midlands and in Bulawayo.

The three small coal-powered plants have the potential to produce 375 megawatts (MW) of power. That is almost 20% of the country’s electricity requirements.

But the three power stations are not producing any energy of significance. In fact, they have become monuments whose tall steaming chimneys are reminders of a distant past when infrastructure was kept in functioning order.
 
The power stations have become shells which are a huge cost to the parastatal and ultimately to the taxpayer.

Zimbabwe today is faced with a power crisis. Zesa has in the past three weeks been forced to effect load-shedding because of a power deficit. The company last week said its generators at Kariba and Hwange were down, resulting in the loss of 250 Megawatts and 220 MW respectively. The generators will be out for the next six weeks during which period the power utility is expected to find foreign currency to purchase replacement parts and ship them to Zimbabwe.

Zimbabwe has a peak power demand of 2 100 MW while local generation stands at 1 200 MW, giving a supply imbalance of 900 MW which is imported. Zesa’s total installed capacity is about 2 000 MW.

Other than the small power stations, the country also has two larger power stations; a hydro-electrical plant in Kariba (666 MW) and a thermal generator in Hwange (920 MW). The country’s power stations have the potential to produce more than 1 900 MW which is adequate at the current depressed consumption. But the plants are not functioning at full capacity and the country has to import to make up for the deficit.

Zesa has been forced to import 250 MW of power from Hydro Cahorra Bassa (HCB) of Mozambique, 150 MW from Eskom of South Africa and 150 MW from Snel in the Democratic Republic of the Congo (DRC).

But in 2007, Eskom is expected to terminate electricity exports to the region because the anticipated economic boom in that country should result in increased demand.

Zesa has said it will need to set up new plants or expand existing ones in anticipation of that gap. The country will need at an extra 1 200 MW to cope with the demand.

The need for new infrastructure can be lessened if Zesa can optimise the use of existing facilities. The country, analysts say, will find it difficult to source funding for new projects when it is failing to repair and maintain existing plants.

There have been plans to expand Kariba power station so that it produces an extra 300 MW. Zesa entered an ill-fated deal with Malaysia’s YTL in the hope of expanding generation at Hwange by an extra 333 MW but nothing came of it.

There has been talk about developing two new projects at Batoka HEP plant along the Zambezi River and the Gokwe North thermal power station next to the vast Sengwa coalfields. The Batoka project, with a potential of 800 MW, was expected to go on stream in 2010 but that will not happen now. Plans to develop the 1 400 MW Gokwe North plant, in which Zesa was in partnership with Rio Tinto and government, has also been deferred.

The project, analysts say, is enmeshed in controversy as government is reluctant to see the private sector constructing and running such a strategic resource.

“The power station should have been built 10 years ago,” said economist John Robertson.

“For Gokwe, Rio owns coal deposits at Sengwe. If it is given the go-ahead, it will finance the cost of the power station,” he said. “Government fears that Rio will enjoy the profits and externalise them. If Rio were to externalise the profits it would be less than we are externalising every month paying Eskom, HCB and Snel,” he said.

Investors shied away from the two projects because of the uncertainty in the country wrought by the land invasions and President Robert Mugabe’s quarrel with the West. The failure of the two huge capital projects to get off the ground typifies the state of industry in Zimbabwe. There is no new investment of note coming into the country.

The attempt to sell part of Hwange Power Station to Malaysia’s YTL, as part of an earlier “Look East” — or rather South-South — policy was a disaster. It scared away other potential investors in the country’s power sector. This was the first major show of the government’s lack of foresight in developing the country’s power sources.

As analysts forecast five years ago, demand for electricity would outstrip supply unless new plants were commissioned. Power stations require huge capital outlay to construct and vast sums of foreign currency to maintain.

Last week Zesa said it required US$2 billion to put its house in order. That is a huge sum which will not be coming to Zimbabwe soon as long as there is no balance of payments support. Pledges from Zimbabwe’s friends in the East have come in few and far between.

The power sector, like all major facets of the economy, has been hit by the suspension of financial assistance from international organisations such as the World Bank and the International Monetary Fund because of concerns over the erosion of the rule of law and property rights, as well as the government’s fiscal policy. Zesa is a victim of the country’s bad politics.

Considering the strategic position electricity occupies in industry and commerce, the energy deficit that has been exacerbated by the shortage of petrol and diesel is a major threat to economic regeneration.

Piecemeal measures that have been proffered by the parastatals and government have not made an impact. Zesa proposed that local exporters pay for electricity in hard cash, a short-term measure that only increased overhead costs for an already struggling export sector.

With limited resources to hand, the parastatal has been left to use its own limited resources or wait for handouts from the fiscus resulting in inadequate upgrades and network maintenance. The results are manifest in the broken-down plant and equipment.

Also, the company is unable to raise its tariffs to meet rising operating costs, ostensibly because the government is keen to protect consumers from further price increases and the rising cost of living.

But Zimbabwe’s energy sector is not suffering simply because the country is broke. The parastatal has been riddled with controversy since its unbundling. It has gone on a huge rural electrification drive without developing new power sources. It has sought deals with the Chinese, the Malaysians and Iranians with very little to show for it.
 
Zesa has become a political playing field where prudent business decisions have been superseded by political posturing. No energy minister in the last 15 years has been able to solve the country’s energy crisis. It is bound to get worse and bring the economy down with it.