POWER utility, Zesa Holdings, has been facing unprecedented challenges in delivering its mandate to consumers. These challenges revolved around its inability to charge cost effective tariffs and to secure their regular US$17 million requirement to import power from South Africa and Mozambique. As a result, Zesa is operating unsustainably, which is why the parastatal is now looking for alternative energy options from independent power producers (IPPs). It is around these challenges that Zesa executive chairperson Sydney Gata (SG,), sat down with our senior business reporter, Tatira Zwinoira (TZ), in an interview to explain what problems they are facing and how they can get out of it. The discussion was held at the recently concluded ‘International Renewable Energy Conference and Expo’ hosted by our weekly sister paper The Standard, under the media house Alpha Media Holdings (AMH). AMH also publishes the weeklies, Zimbabwe Independent and Weekly Digest along with the daily, NewsDay.
TZ: You had a very interesting presentation on Zesa in terms of not getting adequate support, particularly foreign currency. How do you look at renewable energy as an actual deterrent to some of the challenges you have as an organisation?
SG: Let me start by saying that renewable energy is tomorrow’s world. It is a mandatory direction that the world has chosen and made declarations to that effect. As to how much participation there would be by the renewable energy sector, I would say that every year we are going to see changes in the generation mix or electric supply mix. More and more, we are going to be relying on renewable energy. So, that is the fact, that is the reality and the world is of one mind on that.
What it means is that institutions that supplied technology, financing and equipment for power generation are gradually shifting towards renewable energy programmes. From funding, first and foremost, and from operations as well as especially plant, equipment and machinery that is required for the technology to generalise it.
TZ: In terms of Zesa’s operations, do you think there is space for you to explore renewable energy to meet some of the deficit challenges you have in terms of power generation?
SG: Zesa will support renewable energy, support the industry to the fullest extent. But, one of the advantages of renewable energy technologies is that they are not as capital intensive as the conventional technologies, people can start very small.
So, we are seeing new power stations, mostly PV (photovoltaic, a solar park or farm designed to supply power into the national electricity grid), a bit of wind here and there, which are starting at very basic levels. They start at two/three megawatts and grow, and grow with the market so that gives us a very, very, good balance between demand and supply of that technology.
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TZ: Why can a budget not be drawn up to invest into renewable energy, like solar?
SG: My view is clear on this, perhaps it is a personal view more than a Zesa view, because I said earlier that it (renewable energy) is modular, and one can start very small. I believe in encouraging the public to go into a venture to do this.
I believe that Zesa should not crowd out private capital because first of all, we do not have it. And secondly, we do not want to destroy opportunities for other citizens and institutions to play in this field. That is my attitude to you.
TZ: You have been highlighting these challenges of not getting adequate foreign currency. Has there been any discussions at the ministry level to try and support you so that you can be allocated US$17 million monthly import requirement?
SG: It is still a sore point. There have been discussions, nothing has been resolved in a sustainable way. It is a very big sore point for the Zesa that we spend, for instance, last year we spent US$225 million importing electricity. In my opinion, we did not need to import because we are not supporting as a government. We are not really supporting local initiatives as well as we can.
So, what is disheartening is that quite a bit of that import is coming from IPP (independent power producer) companies in other countries, while we are sitting on 7 400 megawatts of licensed IPP projects, which we are not supporting. We are not supporting them enough to be able to attract investment and lending. And, imagine if all that US$225 million was to pay to our own IPPs that would make a very big difference in our energy economy.
TZ: What would be the long-lasting solution to deal with that problem?
SG: We are dealing with it. The quickest and cheapest way is to support our own IPPs. As I said, in my opinion, even in the last 10 years, not one single megawatt needed to be imported if we supported our own IPPs. So, I do not know what answer I could give.
This is still a pending opportunity. The sooner we address it, the better for the nation.
TZ: For the rest of the year, what big projects have you got lined up as Zesa?
SG: We have them, yes. On the generation side, we have Hwange Power Station 7 and 8 which are going to come in starting this year. Towards the end of the year, unit 7 would be on the bars, so to speak. Then we are fully funded, now, for a complete overhaul of the existing power situation at Hwange. That work will start this year which is long, long overdue. But, we are so happy that we are now fully funded to do that project.
We also have the full funds for Bulawayo Power Station. That is another very interesting project which is also starting this year.
Then, on the distribution, retail, supply, and transmission there are quite a number of projects that will be starting this year. We are working towards the final end of the financing structures and facilities for them. I am not quite at liberty to discuss details, because we are still in negotiation on that. But, once those things are accomplished, those stages are secured.
We can for the first time in our country, begin to talk about total electrification of Zimbabwe. Within the course of this year, we shall be going out to the public. We are planning a big ‘indaba’ to engage with all stakeholders in the country, through their authorised representatives, to inform them of a master plan. That is a strategic response to the National Development Strategy 1 (NDS1), NDS 2 and Vision 2030.
Zesa spent most of last year quietly recapitalising the industry and we are ready now. We should be making these announcements in July, after securing all the facilities that we are still negotiating.
It is a pity I cannot give you details today because we are in negotiation, but we are confident that they will be secured and once that is done, we shall be informing the Republic of Zimbabwe at large that they have long term energy security. And, we shall be announcing, I believe, the end of load shedding for all time.
TZ: In terms of capital support, how much does Zesa need to fund its projects per annum on average?
SG: That is a difficult figure because it changes with projects. But, what we are putting together this year for a programme that is not really an annual project programme as such, what we need to end loadshedding, to start exporting power, to provide the reinforcement of the transmission system, to cover the backlog of connections some 300 000 applications that we are accumulating and to cover that, to restore national public lighting and to upgrade them, and to provide electricity to every citizen of Zimbabwe we are looking at a total of about US$2,5 billion over next three years and thereafter. I cannot give you a figure of the rollout for the last electrification, you know some of our people live in remote villages. I cannot give that. I can only say that we shall have the capacity to provide them the service, but I cannot say the timing. All I know is that by 2030, everyone in this country should have electricity.
