WE are concerned about reports that Zimbabwe faces imminent massive load shedding starting next week if Zesa Holdings fails to settle an outstanding power import bill of $43 million owed to Eskom of South Africa and Hydro Cahora Bassa (HCB) of Mozambique. What is particularly worrying is that the development comes at the onset of winter — a period in which the country’s power usage rises on both the domestic and business fronts.
Zimbabwe has been enjoying uninterrupted power supplies for the past 16 months due to various initiatives, including imports. But the country could revert to the dark period of long hours of load shedding with devastating consequences for the economy which is slowly coming out of the woods owing to the highly successful Command Agriculture scheme and strong gains in the mining industry.
These two sectors are anchoring economic turnaround initiatives and any disruption to their operations would be detrimental to efforts to breathe life into the wider economy. We therefore implore authorities, in particular the Reserve Bank of Zimbabwe and the Ministry of Finance and Economic Development, to avail resources to Zesa so that it clears its arrears with Eskom and HCB for the restoration of normal supplies. Eskom supplies Zimbabwe with 300 megawatts, while HCB chips in with 50 megawatts.
The South African power company has threatened to switch off Zimbabwe if Zesa fails to pay the outstanding amount in eight days. Zimbabwe consumes about 1 400 megawatts daily against a generating capacity of around 980 megawatts. Zesa owes the two regional power giants more than $100 million, but the $43 million is emanating from the payment plan the power company has failed to honour due to foreign currency shortages.
Earlier this year Zesa made payment plans with regional power utilities and should have paid $89 million between January and April. The authority managed to pay off $46 million, leaving a balance of $43 million. The payment plan included 2016 arrears.
The creditors gave Zesa up to May 31 to clear the arrears in the payment plan, but with only eight days to go, the power utility has not paid anything. Zesa chief executive Engineer Josh Chifamba on Monday confirmed they were yet to settle the arrears. “We are yet to service the debt but we are making frantic efforts to pay and revert to the original payment plan,” he said. “We have been having meetings with the Reserve Bank of Zimbabwe and the Ministry of Finance and Economic Development to find ways of coming out of this (problem). Hopefully, this week something will come up because everyone knows the effects of failing to pay.”
We commiserate with Zesa and are aware of the untenable situation they find themselves in considering the current cash crunch. We also understand the competing demands for foreign currency at the RBZ but feel something should be done urgently to avert a situation where the two regional power utilities could be forced to cut us off. It is clear that with a generation capacity of 980MW against a daily demand of 1 400MW, we are left with a shortfall of around 420MW which is offset by the imports. And with the winter wheat Command Scheme already underway, the country’s demand for electricity is likely to go up.
It is therefore crucial for authorities to engage Eskom and HCB and make arrangements to clear the arrears before the two entities resort to drastic measures. Industrialists and miners have already called on monetary authorities to prioritise power provision saying any cut on the supplies would have a devastating effect on industry and winter wheat cropping currently underway and we agree with them.
Chamber of Mines chief executive officer Mr Isaac Kwesu said: “Once they cut off it will be insufficient to meet national demand. If more than 300 megawatts is cut off or reduced it means the authorities have to re-prioritise so that the productive sectors are given importance considering our role in the economy. From the mining industry we are saying whatever situation, give us what is available so that we keep on carrying the economy in terms of adequate foreign exchange.
“The economy has been improving and it means the monetary authorities should give Zesa a priority the same way Zesa has been prioritising us.”
An official from the Confederation of Zimbabwe Industries added: “Respective authorities have to move with speed to ensure the money is availed otherwise we don’t want to move one step forward and two steps backwards. We have policies put in place to turn around the economy and without power we will be shooting ourselves in the foot. We should not undermine our efforts and reduce the business confidence, which is on the high.”
We call on the RBZ and Treasury to treat this matter with the urgency it deserves.