Power bills weigh down Sable
By Roadwin Chirara, Business Writer
Monday, 06 February 2012 13:36
HARARE – Sable Chemical Industries (Sable) says its power supply has been
restored after the Zimbabwe Electricity Supply Authority (Zesa) had
disconnected it over a $45 million bill.
Sable, the country’s sole ammonium nitrate fertiliser manufacturer has
struggled to settle its power bills with Zesa citing an unviable tariff.
Gavin Sainsbury, TA Holdings Ltd (TA) chief executive, a 51 percent
shareholder in Sable said disconnection of power suppliers to the
Kwekwe-based company had resulted in the suspension of production.
“Power has been restored to the plant but at a capped amount. Disconnection
of power means that production of ammonia, the feedstock of fertiliser, is
curtailed completely,” Sainsbury said.
He however, said despite resumption of activity at the company, it continued
to be dogged by power cuts.
“It is best to ask Sable what the capacity is at present, but past capacity
has been affected by load shedding,” the TA boss said.
He said the company was currently engaged in negotiation with Zesa over a
new tariff but any planned increases would affect Sable’s viability.
“A power tariff agreement was reached for 2011. The tariff for 2012 is
currently under discussion and is yet to be concluded. Any increases in
tariffs will have negative effects on viability,” said Sainsbury.
He said the company’s product remained competitively priced but was engaging
government over the influx of cheap imports from Asia.
“Sable produces nitrogenous fertilisers which are an international
commodity. Sable’s prices are competitive on an import parity basis. In
addition there is a well-publicised shortage of Nitrogen (AN) in Zimbabwe at
the current time,” the TA chief executive said.
“Discussions are on-going with the relevant authorities to find a solution
to this problem,” he said.
Sable requires 115 MW of power to operate its 14-unit electrolysis plant
which breaks water into hydrogen, the key ingredient.
The hydrogen is then reacted with nitrogen in an ammonia synthesis plant to
produce ammonia.
Part of the ammonia is piped to a nitric acid plant to generate nitric acid,
which is reacted with ammonia in an ammonium nitrate plant to produce liquid
ammonium nitrate.
At full capacity Sable produces 240 000 tonnes of nitrogenous fertiliser.
TA is currently pursuing a gasification project for Sable which will result
in the company cutting its electricity consumption to 30 MW.
The projected is expected to cost over $200 million and will result in the
total shut down of its electrolysis plant.
Zesa charges Sable $4,5c per kilowatt-hour (kwh) while the company wants its
reduced to $3c per kwh to remain viable.
The power utility has already announced plans to review upwards all supply
contract tariffs for the year, a position that has been condemned by the
Confederation of Zimbabwe Industries.