Energy and Power Development, Minister Samuel Undenge

… as coal producers cut back on supplies

SUPPLIERS of coal are tightening the screws on ZESA Holdings’ Hwange Power Station (HPS) due to non-payment of arrears, triggering fears that the country could be headed towards a crippling power crisis.
HPS is only left with coal provisions for just over a month and is finding it difficult to secure fresh supplies from Hwange Colliery Company Limited (HCCL) and Makomo Resources because of cash-flow constraints.
Zimbabwe Power Company (ZPC), a unit of power utility ZESA, owns the plant.
ZPC has started rationing the available coal to allow HPS, which is also dogged by the frequent breakdown of its ageing equipment, debts and poor capitalisation, to run longer.
HPS requires between 3 000 tonnes and 4 000 tonnes of coal per day, or about 120 000 tonnes per month, to operate optimally.
HPS has potential to produce 920 megawatts (MW), but was only generating 278MW as of Monday.
The power station depends on coal supplies from Makomo and HCCL where indications are that production has declined sharply after a foreign contractor assigned to produce 200 000 tonnes of coal per month suspended operations over a US$50 million debt.
Reports in February suggested that HCCL was producing about 36 000 tonnes per month, from a peak of 300 000 tonnes.
Makomo has a contract to supply 60 000 tonnes of coal to HPS per month, but is now being owed substantial amounts. As of February, ZPC owed Makomo about US$25 million.
Last week, Energy and Power Development Minister, Samuel Undenge, who was not picking up calls to his mobile number yesterday, had to fly to Hwange to assess the situation.
Makomo’s general manager, Samson Mabvira, blamed the situation at HPS on payment bottlenecks, saying a reduction in power supplies from Zimbabwe’s largest producer of electricity could deal a blow to ongoing efforts to repair the fragile economy, expected to grow by 3,7 percent this year.
“ZPC will blame the downstream industries (mines) for these problems. HPS will not tell the minister that they did not pay for supplies,” Mabvira told the Financial Gazette. “They will not attack the real issue – it is a blame game. And downstream industries will raise their on issues,” he added.
HCCL’s managing director, Thomas Makore, confirmed reducing supplies to HPS.
“The first question to ask is: Are they paying on time? Ask them if they are paying on time,” he said. “Hwange needs payments in order to produce coal.”
ZESA’s spokesman, Fullard Gwasira, declined to respond to questions from theFinancial Gazette, saying he would only do so after a meeting scheduled for today.
Zimbabwe’s power situation has been made worse by Eskom, which is threatening to cut off electricity exports to Zimbabwe, due to accumulating arrears.

Hwange managing director, Thomas Makore

South Africa’s Eskom, which has been exporting 1 400MW to Zimbabwe, is owed over US$43 million.
Some parts of the country have, since the weekend, been experiencing blackouts for the first time since government inked a multimillion dollar deal with Eskom.
Zimbabwe has been generating less than half of about 2 000MW required to keep industries running.
Electricity blackouts could affect the agro-dependent economy, particularly at a time when the winter wheat farming season has just begun.
Under a Command Wheat programme, farmers are earmarked to produce 200 000 tonnes of wheat, from under 40 000 tonnes the previous season.
Electricity will be required to irrigate the crop planted during the dry season.
The mining industry will also suffer if government does not bailout ZESA.
A report by the Chamber of Mines of Zimbabwe indicates that coal output declined by 42 percent in 2016 to 2,52 million tonnes, from 4,34 million tonnes in 2015 due to a sharp drop in output at HCCL.
Zimbabwe’s continued power supply crisis is posing the biggest obstacle to growth.
Under government’s economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, the energy sector is projected to grow by 4,2 percent, 4,5 percent, seven percent, 9,8 percent, 11 percent and 16 percent in 2013, 2014, 2015, 2016, 2017 and 2018, respectively.
In 2005, the Zimbabwe Energy Regulatory Authority warned that Zimbabwe’s power challenges could worsen unless new generation projects were implemented.
After failing to invest in new capacity for over a decade, and moving at a snail’s pace in licensing private operators, the cash-strapped government appeared to have finally smelt the coffee by placing power generation among its top priorities in the last two years.
But the long gestation period for power projects means that current projects will only start feeding into the national grid a year from now.