Government has ordered major electricity consumers in the country to cut by up to 25 percent their power usage to alleviate the current shortages. These include major mining companies and the manufacturing sector.
This is as much difficult to swallow for the companies directly affected as it is a painful decision for the Government to take. Both are caught between a rock and a hard place. The companies want power to produce as much as Government wants revenue in the form of royalties and taxes.
The companies are already affected by the routine load-shedding. The steep reduction in power consumption for miners will also add to the challenge of low commodity prices on the international markets for their raw exports.
That means a further decline in earnings for one of the most resilient sectors of the economy which could still generate substantial revenue for the fiscus.
We make this point to show that Government has no intention of deliberately punishing any company; this is an emergency in which alternatives are very limited. There is little room to manoeuvre and time is of the essence.
The causes of the sharp power shortage are given as ranging from routine maintenance work at Hwange to the depressed water levels at Kariba Dam. We don’t want to belabour this point beyond that.
The truth we have to live with is that Government is doing its best to manage a bad situation. It is cold comfort that Zambia, Botswana and South Africa are facing a similar predicament. We don’t know how they are coping.
There are, however, lessons to be learnt from this depressing situation.
The first is the need for forward planning on the part of both Government and business. Warnings were made far back that the Sadc region as a whole would start experiencing major power generation constraints by 2007. It was, therefore, important to anticipate this eventuality. This was apparently not accorded priority status.
For some reasons, governments in the region and the private sector appear to have been more preoccupied with other developments other than power. There must have been silent prayers that this warning might not come to pass. It has, with dire consequences, too.
Second, there is nothing to be gained from playing the blame game. Governments as well as private players are in this together. A flourishing economy benefits all of us; a depressed economy takes us all down the slopes. There is urgent need to work out a solution together to save the economy.
There is the need for cooperation between Government and the private sector to reduce the impact and extent of the current power shortages. That means they have to work together to find power supplements by weighing the opportunity costs of not mining at all.
It is easy in politics to ascribe blame and wait for the ruling party to work out solutions while hoping to capitalise on its failures, the “tongai tione” mentality. Such an attitude would be suicidal for any company that’s serious about mining in the country. The costs of shutting down and reopening may well not be worth it.
For years Government has been pushing the idea of local beneficiation of minerals. Beyond creating employment, this business proposition means a higher return on investment for the business owners. But more importantly, it provides a better cushion against price volatility on the world markets than export of unprocessed minerals.
Trading in value added goods will leave companies with more reserves to alleviate crises like the current power outages. Companies should be able to use diesel generators or solar energy to power peripheral requirements.
There are also private players who were issued with licences to generate power independently. Either the conditions of the licences don’t make economic sense, or they are sitting on these documents hoping to make money through partnerships.
Government should crack the whip. They should simply be made to account. They either surrender the licences or deliver on their promises. The economy needs power, as a matter of urgency.
Finally, for his part, Energy and Power Development Minister Samuel Undenge recently made an undertaking that measures were being taken for Zimbabwe to achieve energy self-sufficiency by 2018.
He said we would have enough to export. We didn’t take that as a political joke; we will keep checking on progress until we get the 4 000MW.