HomeBusiness DigestPetty tariff wars set to plunge Zim into darkness

Petty tariff wars set to plunge Zim into darkness

Shakeman Mugari

SAVE for public posturing, Zimbabwe authorities have not moved an inch to avert the pending regional power crisis expected at the start of next year

. Instead they have expended their efforts fighting petty wars over tariff increases — something that will not stop the country plunging into darkness when the regional power shortages start taking effect next year.

While other countries are preparing for the eventual “blackout”, authorities in Zimbabwe have for the past four months been at each other’s throats.

Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono says Zesa Holdings and the Minister of Energy and Power Development, Mike Nyambuya, are conniving to mislead the cabinet and President Robert Mugabe to justify tariff increases, accusing them of trying to sabotage his war on inflation.

He does not explain why inflation has been galloping despite the absence of a significant tariff increase in the last three years.

Zesa executive chairman, Sidney Gata, accuses Gono of misrepresenting facts to justify his interventions.

Nyambuya, although bitter at being overruled by Gono, seems boxed into a corner.

While adding flavour to the drama, the accusations and counter accusations will certainly not provide Zimbabwe with electricity when the shortages hit the region next year.

The country is already facing serious power shortages that have badly affected both domestic and industrial consumers.

As things stand, Gono seems to have the upper hand after convincing cabinet and Mugabe that Zesa only needed a 95% increase instead of the 560% it had proposed.

Not accepting defeat, Gata has vowed to take the matter to another level — this time to the president.

After failing to make headway in cabinet, Gata last week pleaded for direct access to President Mugabe to present his side of the story and counter Gono’s allegations.

Indications are that he is bracing for an all-out fight with Gono.

But whoever wins the battle would only have achieved a pyrrhic victory because the key challenge to ensure consistent power supplies in 2007 will remain untackled.

The situation on the ground shows that none of these exchanges and accusations will save Zimbabwe from the pending black-out next year.

The reality is that the power outages currently wreaking havoc in industry will intensify next year unless something dramatic happens between now and year-end.

Despite this pending danger, the authorities look unperturbed.

There are now fears that Mozambique, South Africa, Zambia and the DRC, which supply Zimbabwe with 35% of its electricity, might not have enough to spare for us next year.

Even with enough foreign currency to pay for the imports, there is no guarantee that regional suppliers like HCB (Mozambique), Eskom (South Africa), Snel (DRC) and Zesco (Zambia), have the capacity for exports.

Revelations this week that Zesa is still to extend contracts with some of its power suppliers only make Zimbabwe’s situation more precarious.

The supply contract with Mozambique’s Electricidade de Mocambique (EDM) hangs in the balance as Zesa still owes the Mozambican company about US$8,4 million.

Zimbabwe now risks losing the contract unless it makes an urgent payment; it also needs to raise millions in foreign currency to finance the proposed extension of Hydro Cahora Bassa (HCB) to increase generation.

Zesa still owes about US$7 million to Snel of the DRC and looks set to lose the contract unless an urgent payment is made. The payments would however not save the country from the looming crisis.

While the contract with HCB says it can supply 200mw, HCB is however obliged to supply only 100mw, while the remainder can only be made available “as and when available”.

Eskom’s commitment is also heavily limited during peak hours.

Snel’s 100mw supply is erratic especially at peak, while Zesco’s 140mw is also not firm and can only be available during off-peak hours.

Despite all these insecure contracts with suppliers, Zimbabwe has failed to improve its own generation capacity because of foreign currency, coal and diesel shortages.

Poorly performing generators and ageing equipment have made the situation worse.

Zesa’s capacity to supply power is dwindling by the day. The three small power stations — Bulawayo, Harare and Munyati — which can supply a combined 150 megawatts, have since shut down due to shortages of coal and spare parts.

Unconfirmed reports this week said the power utility has been “cannibalising” the three stations to repair Hwange thermal power station.

Hwange station, which is capable of generating 780mw when at full capacity, is currently producing 400mw due to perennial equipment breakdowns.

Shortages of coal (8 000 tonnes per day) and diesel have also hit the stations.

To return to full capacity, Zesa would have to pump out US$90 million in overhauls, mill refurbishments and spares.

While the obvious challenge at the moment is the availability of foreign currency to repair the 22-year-old plant, the real crux of the problem is the time it will take to finish the refurbishments.

It will take 18 months to rehabilitate Hwange station, by which time the economy would have bled.

Assuming that work starts next month, full capacity would only resume in December next year.

Kariba, which can supply 750mw, is currently generating 720mw. Its generators are however ageing and full supply is subject to the level of water at that time.

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