A TYPICAL business entity is losing around ZW$2,5 million (US$162 443) in annual sales due to persistent power outages, a survey has revealed.
The country is currently facing prolonged power cuts lasting up to 18 hours daily due to low levels at Kariba Power Station, corruption, limited investment in the energy sector and staggering domestic debts.
The survey conducted by the Zimbabwe National Chamber of Commerce (ZNCC) highlighted that the energy crisis had reached catastrophic levels as each business entity was haemorrhaging ZW$20 000 worth of production output and ZW$30 000 in sales monthly.
The study found that on average each business entity uses 22 litres per day to power its economic activities when there are power outages on any particular day.
In monetary terms on average each company purchases fuel worth ZW$322 per day when there is no electricity to ensure smooth running of its business activities.
The extra costs, the survey said, have a huge bearing on operating costs as respondents indicated that the daily average amount they would normally pay for regular supply of electricity would be less than ZW$10.
“Majority of businesses representing 90% of the sample indicated that electricity outages negatively affects their revenues resulting in revenue loss. The losses among others come due to the fact that they will have reduced sales and some orders will be lost as they will be considered unreliable suppliers,” the report reads.
“Around 85% of businesses loses customers after power outages given that businesses will not be able to effectively communicate with the said customers, they will not be able to meet deadlines agreed with customers and delivery due to dates will be missed. As such the customers will start looking for other suppliers going forward.”
The survey also found that labour productivity has also declined significantly due to power cuts.“Around 87% of surveyed firms indicated electricity power outages result in reduced/decreased labour productivity. According to respondents these losses emanate from the fact that during electricity outages salaried labour will be lying idle but the same will be paid in full salaries at the end of the month.
“Furthermore loss in labour productivity also result from unplanned overtime work whereby some labour will do overtime once electricity power is back for instance after normal working hours or during weekends to produce the same output level that they were expected to produce during normal working hours but they will be paid extra hourly rates for each extra hour worked,” the report read.
The report highlighted that 65% of the firms singled out electricity outages as the major challenge affecting the export business.Speaking at the 5th annual business review conference, Energy and Power Development minister Fortune Chasi blamed the private sector for failing to invest in power generation.
“There has been little investment in the energy sector especially from the private sector. As the saying goes, you reap what you sow,” Chasi told delegates.
Zimbabwe has an installed capacity of around 2 000MW, but requires 2 300MW. However current production levels are at 917MW.