Govt to restructure energy sector
Written by Taurai Mangudhla, Business Writer
Monday, 04 June 2012 14:40
HARARE – Zimbabwe plans to restructure its energy sector and make way for
independent power distribution firms, Zesa Holdings (Zesa) chief executive
Josh Chifamba said.
He told a Thursday Confederation of Zimbabwe Industries Annual General
Meeting, the move was in line with government’s plans to improve utility
services while establishing an independent power regulator.
“There is a lot of progress on that and I wouldn’t want to pre-empt it (but)
there is a whole white paper on that and the minister is supposed to present
it to cabinet,” Chifamba said without giving specifics of the proposed new
plan.
The energy sector is currently regulated by Zimbabwe Energy Regulatory
Authority.
The Zesa chief’s remarks came after Francis Masawi, an engineer and regional
independent energy consultant, argued there was an imminent need to
restructure the country’s power sector.
He said the current single buyer model-only by Zimbabwe Electricity
Transmission and Distribution Company (ZETDC)-was an impediment to
investment in the energy sector.
“Imagine you have a private production company and you want to sell to a
sole buyer that is owed $500 million by their consumers, how
are they likely to pay,” Masawi said.
“That thing (the single buyer model) must be done away with; it doesn’t
exist in the Act. It was only transitional.”
Masawi said Zesa should assume a role of shareholder only.
He said competition should be introduced in the supply side of electricity
just as it is required in the petroleum sector.
“Whatever the reason, the current structure has failed to resuscitate the
energy sector.”
Zimbabwe currently has capacity to generate about 1 200 MW of
electricity, mainly from Kariba Hydro Power Station and Hwange Power Station
(HPS) compared to a rising national demand of around 2 200MW.
The country’s generation capacity is now half of what it used to be in 1980
when the economy and population was smaller.
New projects that are meant to improve the current deficit position could
take longer to commence after potential takers for the country’s HPS
rehabilitation project asked for a one month extension on the June 5,
tendering deadline.
Chifamba said this would delay adjudication of tender to restore HPS unit
seven and eight to end of July.
“If we get to a financial close by the end of the year then by early 2016
there should be something coming out of the two projects,” he said, adding
his organisation was aware of the anxiety among Zimbabweans for an immediate
power solution. Zesa, Chifamba said, was not spared by the country’s
decade-long economic stagnation and needs a lot of investment.
“The state of the equipment at all levels is appalling and dangerous.
That explains the number of accidents we are having now.”
In February government announced plans to unbundle the Zimbabwe Electricity
Transmission and Distribution Company (ZETDC) into two separate entities to
improve operating efficiency.
ZETDC is responsible generating, transmitting and distributing power and was
formed in 2002 after government unbundled ZETDC into different companies
under Zesa.
The Electricity Act ushered in the formation of five successor companies,
the Zimbabwe Power Company (ZPC), Zimbabwe Electricity Transmission Company
(Zetco), Zimbabwe Electricity Distribution Company (ZEDC), Zesa Enterprises
and Powertel Communications.
ZEDC’s business is the distribution and retail of electricity to the final
end user.
In line with the approved structure, all power generation assets and
operations are under ZPC.
Zesa Enterprises, another subsidiary of Zesa Holdings comprises of four
business units namely Zesa Technology Centre, Production and Services,
Transport Logistics and Projects.
It is a flexible investment arm for Zesa Holdings that has a diversified
business portfolio.