HomeBusiness DigestZesa faces ZW$1,4bn loss over power cuts

Zesa faces ZW$1,4bn loss over power cuts

POWER utility Zesa Holdings has projected a ZW$1,35 billion loss this year due to prolonged power cuts, businessdigest has learnt.


The country has been subjected to massive rolling power cuts lasting up to 18 hours daily. This has severely crippled industry and, consequently, the national industrial output. Companies said they were losing $200 million a month due to power outages. The Confederation of Zimbabwe Industries (CZI) predicts that the 2019 outlook will be the lowest in three years.

Zimbabwe Electricity Transmission and Distribution Company (ZETDC) acting director Ralph Katsande told businessdigest on the sidelines of a tour of a Turnall Holdings Limited plant in Harare organised by the CZI this week that the power utility is expecting a loss of US$135 million — which translates to about ZW$1,35 billion — in lost sales by year-end if electricity shortages persist.

“Our expectation is that we are going to lose about US$135 million in lost sales because of load shedding. We hope it will be reduced going forward as we get additional power to reduce load-shedding, but if the current situation continues that is the amount of money that Zesa would have lost by year-end,” Katsande said.
He said Zesa is currently focussing on buying power from green energy producers in a bid to increase electricity supply and curb losses.

“As a way of stabilising the power crisis, the regulator, Zimbabwe Energy Regulatory Authority (Zera), is licencing solar players and we are then buying that power ourselves. I know recently a two-megawatt plant was commissioned in Nyabira to add renewable energy to the grid,” Katsande said.

“We need about 1 800MW per day, but unfortunately currently there has been a further scaling down at Kariba, it is now limited down to 190MW from 1 050MW. Hwange is on about 522MW. We receive 50MW from Mozambique, 400MW from Eskom and from small thermals we get about 35MW, that is all the power that’s available. We are still about 700MW short.”

Katsande said Zesa expects to have 170MW from Hwange Unit Six within the next three months and will resume negotiations with HCB of Mozambique to restore power supplies which had been discontinued due to failure to settle debts.

“There are some interventions to the power problem. In the short term we are relying on imports where we have electricity coming from South Africa. Our next focus is (to import more power from) Mozambique. In the short-term as well, there is Unit Six at Hwange Power Station that is undergoing some repairs, probably in 12 weeks we will have another 170MW coming from that unit which will go a long way in improving the power supply situation,” he said.

For the past four months, the power utility has struggled to generate electricity as water levels at Kariba Dam are depleting due to the drought.

The power supply situation has been worsened by Zesa’s failure to pay regional suppliers, namely South African and Mozambican power utilities Eskom and HCB respectively. This has resulted in both drastically cutting power supply from 400MW to a mere 50MW.

However, Eskom has since restored power supplies after the government negotiated a debt repayment plan which will entail payment of US$890 000 a week underpinned by a US$15 million facility by a financial institution.

Presenting his Mid-Term Fiscal Budget Review earlier this month, Finance minister Mthuli Ncube revised electricity tariffs. This is after Zesa pointed out that the tariffs it had been levying were not viable.

For exporting businesses, tariffs rose from an average of ZW$0,0986 per kilowatt hour (kWh) to an average of ZW$0,45/kWh and electricity for domestic consumers was increased from an average of ZW$0,0986/kWh to an average of ZW$0,27/kWh in response to the current wave of inflation .

Energy minister Fortune Chasi told journalists during the Turnall plant tour that the increase was necessary and is part of a continuous process aimed at making tariffs cost-reflective.

“The tariff issue is a continuous discussion. It is still on the table, we haven’t achieved cost-reflectivity but it is not something that has a big bang and so we have ways of dealing with that. What we have in-built within that tariff increase, small as it is, is a lifeline for the small consumers, so the figure that has been given is what is expected roughly to be expended by families. So we incentivise them to use less by ‘penalising’ them when they use more than what has been indicated in there,” he said.

“We hope that they will be able to operate within the threshold. If one decides then to operate their small industry at home, they then get what is called penalty tariff.”

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