US$3,3 Billion Required to Boost Power Output

ZIMBABWE’S cash-strapped government requires over US$3,3 billion in the next six years to boost aggregate energy supplies at the country’s major power plants.

Pressure is amounting on government to seek alternative power sources following the current below capacity performance of power plants and the breakdown of the Zambia-Zimbabwe inter-connector, a grid that transmits imported electricity from the Democratic Republic of the Congo.

According to the National Economic Consultative Forum (NECF) energy taskforce report for February, at least five energy plants — Hwange thermal, Kariba South Extension, Gokwe North, Lupane Gas and Batoka power plant — should be commissioned by 2015 if government is to fully address domestic and commercial energy demands. 

Currently, the country generates and imports 1 340 megawatts against a target of 2 090 megawatts.

This means that the new inclusive government would require urgent financing for transmission and construction costs of new plants during a planned lead-time of six years.

Government, according to the report, could be losing up to US$200 million every year in “low grade coal” imports from regional countries, which resulted from viability problems at Hwange Colliery.

All coal deposits parcelled out to individuals in Bubi area, the report stated, must be consolidated into one big coal-field at which a thermal power plant can be built instead of exporting coal to South Africa’s power utility, Eskom.

The NECF also criticised poor government policies and unviable tariffs for Zimbabwe’s failure to partner with South Africa in a multi-million dollar energy project.

“It is noted that South Africa was building gas plants in Nigeria when Zimbabwe next door had enough resources but was being left out. While politics could be at play, tariff structures in the energy sector were mainly the reason why foreign investment in the gas sector is non existent,” read the report.

Below capacity generation has already crippled industry despite frantic efforts by some companies to settle energy bills in foreign currency, before the introduction of multi-currencying to the national payment system.

Soaring production costs, flooding of mines and declining agricultural productivity, among other problems, have resulted from the intermittent power cuts.

The frequent power outages have resulted in domestic consumers incurring inflated costs in alternative energy sources such as firewood, paraffin, gas, gel and candles.

“The task force noted with grave concern the effect of diminishing generation which compromises international system integrity given that Zimbabwe is at the epicentre of the Southern African Power Pool (SAPP),” read the report.

Lack of funds, the report stated, have also hampered government plans to explore the feasibility study of the coal-bed methane project.

The taskforce appealed to government to “seriously consider” external investors in major explorations projects.

“A flexible framework on the shareholding must be allowed given the risky nature of the capital involved to encourage foreign direct investment in this area,” read the report.

Investment laws prohibit foreign investors from acquiring a controlling stake in local companies.

Turning to vandalism, the NECF noted that more than US$1,2 billion dollars were lost in the last eight years.

“The taskforce strongly recommends the establishment of an Economic Intelligence Unit for the country to deal with such issues and all issues associated with the economy including economic sabotage.”

Meanwhile government has ordered power utility Zesa to charge a minimum of US$10 for February tariffs.

BY BERNARD MPOFU