Blackouts: Another rough ride on the way

Unless serious work begins to address the power crisis, even ambitious targets set under Vision 2030 are in grave danger.

AT the beginning of this year, the Zimbabwe National Chamber of Commerce (ZNCC) warned that up to US$5 billion could be wiped out of the economy by December 2023, mainly because of power shortages.

Still, the ZNCC gave a significantly optimistic view of the outlook at the time, as government was racing towards commissioning Units 7 and 8 at Hwange Thermal Power station, following a US$1,5 billion investment. The facelift at Hwange added about 600 megawatts (MW) to the national gird.

Economic turmoil since February, when the ZNCC made its projections, has left many in agreement that industries have been extensively decimated by blackouts of up to 16 hours a day for the bigger part of the year.

For now, the outlook is uncertain.

Unless serious work begins to address the power crisis, even ambitious targets set under Vision 2030 are in grave danger.

Despite the significant investment at Hwange and other areas, demand still far outstrips supply.

The situation will be worse in 2024, when massive power guzzling investments in steel production, lithium and chrome mining are expected to come online. The danger is, Zimbabwe is likely to frustrate investors who have committed billions in these projects, and dissuade more foreign direct investment.

As we report elsewhere, with 2023 coming to the end, existing facilities are currently generating between 1 000MW and 1 500MW, against current demand of about 2 000MW.

This deficit will widen and inflict fresh damage on the economy next year. Government has been unsettled.

After many years of handling independent power projects (IPPs) with an iron hand, reality is sinking and policies are being reviewed to accommodate them. It could be a little bit too late, given the massive losses already incurred. Still, progressive policy shifts would be crucial unlock an estimated 1 900MW from IPPs.

Rolling blackouts have exerted pressures on Zimbabwe’s economic growth and competitiveness and added complications to an economy already running on high costs.

With the power sector on its knees, agriculture, along with agro-processing industries, have struggled in 2023, damaging irrigation and cold chain and storage facilities.

This week, the World Bank summed it up when it said: “Zimbabwe’s power shortages cost the country a total of 6,1% gross domestic product (GDP) per year, comprising 2,3% of GDP in generation inefficiencies and excessive network losses, and 3,8% of GDP on the downstream costs of unreliable energy. “If Zimbabwe hopes to achieve the high growth rates needed to move toward upper middle-income status by 2030, it will be critical to realise stable and reliable electricity access”.

The damage inflicted on the economy by blackouts this year cascaded beyond mining and agriculture. Power shortages affected everything. Without corresponding swift action to decisively addressing this long running crisis, it won’t be farfetched to say in 2014, Zimbabwe’s economy will be in for another rough ride.

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