Power cuts switching off economic growth

IT was usual during hyperinflation for management, at analysts’ briefings, to give a review and outlook for critical supplies as well as their likely impact on their operations.

At one meeting, a lady boss of a listed company went, on and on about how her company had bought in large stocks of critical consumables to last them months.
Then, that that really deserved to be over emphasised as a success factor. Interestingly, one of the products she emphasised was Mazoe Orange which was scarce. Delta, a company popular with the analysts for giving plenty of information at briefings, would reserve several slides to cover all its major inputs. Their list would include power, coal and water along with barley malt, maize, sugar, containers and concentrates among others. The first three are supplied by quasi-governmental entities all of whom had been unreliable while the rest are produced by local and outside private companies.
At this year’s meeting the slides on raw material availability were conspicuously absent from the Delta presentation and one analyst appropriately quizzed them on this. Supplies of everything, including water but excluding power, had improved since the economy dollarised, replied Chief Executive Joe Mutizwa. That statement was instructive as it was significant. Raw material availability is no longer a problem to industry because the meagre local supplies are being supplemented by imports. Companies now earn local revenue in hard currency after the introduction of multiple foreign currencies. With these, they now have a wider universe of suppliers both locally and outside where product is abundant and reasonably priced.
Coal supplies have improved due to increased production at Hwange Colliery and easy access to the import market.
The return of water management to local authorities from Zimbabwe National Water Authority, donor support in its processing and distribution,  in addition to the collection of hard currency tariffs from consumers to a large extent helped in stabilising the provision of this precious liquid in Harare. Suburbs like Mabvuku and Tafara that had gone for months without water began receiving it early this year.
The same script cannot be said to include power. Rather than improving, electricity supply is in fact worsening. Companies are losing between 15%-20% of production time to power cuts while equipment and appliances are being damaged because of the outages.
Many companies single out electricity supply as a major hindrance, besides funding, in their endeavours to increase production. Large sums of money are being expended in procuring generators and fuel to fire them. The benefits have been minimal because no sizeable production  can result from hours and days dependence on generators.
Recently the power provider, Zimbabwe Electricity Supply Authority (Zesa), has come under fire for switching off customers because of non-payment of bills.
Except for few dishonest folks, many consumers have not fully met their obligation because they are genuinely unable, although willing, to pay. The inability to pay is also caused by high tariffs that are not in sync with economic performance. In simple terms, companies and individuals do not earn enough to afford the current rates.
Instead of rushing to pull the switch, it is helpful to try and look at issues on a case by case basis. Admittedly it can be an overwhelming task with individuals but probably not so much with corporates.
Take the case of Shabanie Mine as an example.  It may have gone for months without paying for power, which is by the way improper, but was cutting off power supplies the best remedy? The  subsequent damage to equipment after the mine flooded is now having far reaching repercussions.
This has drawn the ire of the government as evidenced by the recent criticism  of Zesa’s actions by the  Parliamentary Portfolio Committee on Mines and Energy (PPCME). The Confederation of Zimbabwe Industry also decried the failure by Zesa to consistently supply power and the consequent debilitating effect of load shedding on production.
The power utility’s problems stem from the near collapse of its generation, transmission and distribution infrastructure which has not been repaired or upgraded for well over a decade.
Erratic coal supply and distribution constraints have also hampered the generation of power with only 900MW out of a possible 1960MW being produced. To bring back production to required levels, lots of money is needed. This cannot be provided from Zesa’s internal sources and even worse the shareholder, government, does not have the money either. The plan to bring on board private investors through Public Private Partnerships (PPS) which has been suggested in various presentations by government. These could help, if implemented.
This brings us to last week’s disclosure by Rio Zimbabwe to the PPCME that it has a foreign partner waiting to invest US$1,3 billion needed to construct a power plant and transmission infrastructure for the Gokwe Thermal Project.
When completed, the station is expected to produce as much as 1400MW. At that point the country will not only have sufficient power but also some surplus to export. For now, however, that is only a dream.
Rio Zim’s partner, according to the reports attributed to the managing director Josephat Sachikonye, want the operating environment to be stable before bringing in the funds. To anyone who knows how businesses are run, that demand is neither hard nor unusual.
If the authorities are serious about improving power supply then they should quickly assure this potential investor and many others similarly interested that indeed the country respects the sanctity of private investments.

 

Ranga Makwata

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