THE massive daily power outages rocking the country have had a devastating impact on an already fragile economy, throwing into disarray President Emmerson Mnangagwa’s mantra that “Zimbabwe is open for business”.
By Kudzai Kuwaza
The severe power cuts by Zesa Holdings which last between 17 to 18 hours daily, are a result of a number of factors which include foreign currency shortages, a breakdown of equipment, debt and severe decline of the water levels at Lake Kariba.
This has been worsened by corruption and incompetence at the state entity. Among a number of fraudulent deals, the Auditor-General’s report for year-ended December 2018 exposed shocking levels of graft with the power utility paying Pito Investments US$4,9 million for transformers nine years ago which were never delivered.
Zesa subsidiary Zimbabwe Power Company paid well over US$560 000 to the same company for the supply of another set of transformers which were also never delivered.
ZPC is locked in a legal battle with ex-convict Wicknell Chivayo over the multi-million 100-megawatt Gwanda solar project. There has been very little progress on the project despite government paying US$5,1 million to Chivayo.
The failure by Zesa to pay what it owes the South African power utility Eskom and Mozambican power entity Hidroeléctrica de Cahora Bassa has resulted in the two foreign entities drastically cutting power exports to Zimbabwe. Zesa owes the two utilities a total of US$83 million.
Eskom cut the power it gives to Zimbabwe from 450 megawatts to a mere 50 megawatts. This has contributed to the severe power cuts being experienced in the country.
Government recently paid US$10 million to Eskom to help facilitate talks for the cut power supply to be restored.
The power cuts have severely paralysed business at a time the country is in desperate need of increased production to revive an economy which is mired in crisis characterised by foreign currency shortage, a debilitating liquidity crisis, low capacity utilisation, company closures and substantive job losses.
At a breakfast meeting this week with Finance minister Mthuli Ncube and Reserve Bank of Zimbabwe (RBZ) governor John Mangudya, Dairibord Zimbabwe revealed that it faces the threat of losing revenue for its perishable products such as milk due to the power outages.
The mining sector has also raised the red flag over the power cuts with some mines going between four and seven days without power.
“The current situation where on average the mining sector is getting four days of power per week has resulted in widespread output losses. Production statistics for the first four months of 2019 show that all key minerals recorded output declines of not less than 10% compared to the same period in 2018 due to power outages,” Chamber of Mines immediate past president and Bindura Nickel Corporation managing director Batirai Manhando said in a recent interview with the Zimbabwe Independent.
“The use of diesel generators, which are expensive to run, has led to an increase in the cost of production impacting negatively on the viability of the mining industry. The immediate implication of this is a decline in foreign exchange earnings from the mining industry and, if the situation is not resolved, we will witness some marginal mines closing their operations in the next few months.”
The retail sector has not been spared the debilitating impact of the power cuts with many outlets forced to cut working hours. Simbisa Brands has cut operating hours due to the power outages.
Hotels in Victoria Falls — the country’s prime tourist destination — have been forced to fork out thousands of dollars for fuel to run diesel-powered generators during 12-hour load-shedding periods.
The unprecedented power crisis in the country is in stark contrast to government’s drive to increase production and lure investment, according to economist Godfrey Kanyenze.
“The daily power cuts being experienced now have never happened in this country. We have no electricity from about 4am to 10pm. When do you do business? We are not witches who work at night,” Kanyenze said.
“This is the antithesis of government’s ‘open for business’ mantra. The whole project is collapsing around them. They are now clutching at straws.”
Kanyenze said a number of businesses have cut working hours with some operating a half-day schedule as a result of the prolonged power outages.
Business consultant Simon Kayereka pointed out that the power cuts are unsustainable.
“The energy crisis in Zimbabwe has long-term effects on the economy if it is not addressed urgently,” Kayereka said. “Right now hotels are running on generators and so is the retail sector, among others. This is very expensive and clearly not sustainable. The fuel for generators is not readily available. It is scary to quantify these costs. We cannot pretend things are normal. Households have not been spared either and once you talk about other social factors it becomes quite frightening.”
The socio-economic impact of the power outages is immense.
Several communities have come to depend on fetching water from homes, schools or churches that have boreholes as city councils are failing to provide water due to a plethora of challenges.
However, with the prolonged power cuts communities can no longer access the water from these sources because there is no power to pump the borehole water, making them vulnerable to water-borne diseases.
The power deficit has resulted in the increased use of firewood for cooking, which aggravates environmental degradation.
The massive power outages are a result of government’s unreliability in paying for power imports, according to economist John Robertson.
“Government has been found out by failing to keep our promises to pay what we owe. They are no longer trusted as a government,” Robertson said. “We are suffering from a crisis of confidence. At this rate we are open for Stone Age business.”
The International Monetary Fund has also expressed concern over the power outages. IMF representative to Zimbabwe Patrick Imam said the countrywide power outages will impact negatively on GDP growth and increase inflation which is currently at 97,85%, the highest since the introduction of the multi-currency regime in 2009.