EDITORIAL COMMENT: Zesa must clear debts, boost internal output

The Chronicle

The Government has just paid US$10 million to South Africa’s electricity utility Eskom, a payment which we hope will persuade the company to restore full exports to Zimbabwe now.

Due to aged infrastructure and recurrent droughts, the Zimbabwe Power Company (ZPC) has, in recent years been producing far less than demand. With domestic generation constrained, the company has relied on exporting regional producers.  Eskom and HCB of Mozambique agreed to sell 450 megawatts and 50MW of electricity to Zimbabwe. For some time over the past two or so years, electricity supplies were stable and there was no load shedding.   

However, a drastic fall in the water level at Kariba Dam thanks to a drought in the 2018/19 season, has cut the hydro-power plant’s capacity by around 50 percent. The low, drought-induced capacity at Kariba coupled with the long-standing impediment of antiquated infrastructure at thermal power plants elsewhere in the country has meant that aggregate power output has dropped resulting in a deficit of between 300MW and 600MW.  

Hwange Thermal Power Station, which is undergoing expansion is delivering 500MW at best, instead of its usually dependable capacity of 700MW. Also, due to foreign currency shortage, Zesa has, since October last year, struggled to raise enough money to pay for supplies from Eskom and HCB.  As a result Zesa’s debt to the two firms had risen to a cumulative US$68 million by the beginning of this month. Eskom in turn curtailed supplies to 50MW in an effort to press for payment while HCB was, by June 2, not supplying any electricity to Zimbabwe.  With no feed from Mozambique and South Africa, Zesa effected a load shedding programme a few weeks ago.

The power utility has also been appealing for support from the Government to be able to pay its debts to Eskom and HCB. This resulted in the US$10 million being paid to the former which is owed US$33 million.  News of the release of the money was announced on Wednesday by Information, Publicity and Broadcasting Services Minister, Monica Mutsvangwa.   

“Cabinet was advised by the Minister of Energy and Power Development that Treasury has now fully paid off Government’s debt obligation to Zesa, which was around RTGS$20 million.

“A further RTGS$20 million is due to be advanced to Zesa by Treasury, in order to boost power generation by the utility. This, together with the payment of US$10 million to Eskom, should help alleviate the current power supply situation,” she said.

We hope that having received such a substantial sum of money, Eskom would be persuaded to agree to negotiating for a payment plan and immediately increase its exports to Zesa from the 50MW it was providing by the beginning of this month.  

In addition to the restoration of supplies from down south, we look forward to the Mozambican feed being restored as well, of course, after the Government pays a meaningful sum of money to HCB as well.  It has to be recalled too that when President Mnangagwa visited Mozambique last week to attend the US-Africa Business Summit he had a discussion with his Mozambican counterpart, Filipe Nyusi, over the possibility of HCB resuming supplies.  

“I have discussed with my counterpart, the President of Mozambique (Filipe Nyusi), to look at Cahora Bassa assisting us,” the President told Bloomberg last week.

“Yes, we are weak on the financial side, but it is possible for us to strike a relationship where we can access the amount of power we need, the deficit we need to cover from Cahora Bassa and I think that is going to be consummated very soon so that we go back on course, but also we continue to implement our own projects in regard to that.”

Hopefully, the consummation of the deal would be in the next few days so that HCB comes back on line to complement Eskom and the depressed domestic output and alleviate the load shedding that has spawned many challenges for all local electricity consumers. 

Users are being forced to use expensive liquefied petroleum gas or firewood for cooking as load shedding often extends for up to 15 hours. Others are using generators, but with the prevailing scarcity of petrol and diesel and their high cost has proved to be an unreliable option.  

Commercial and industrial electricity users are similarly affected. This has cut production time for most of them in addition to increasing the cost of production. Those who can are using huge, diesel-guzzling electricity generators but at a huge cost.  

It is thus a challenging period we are in but the Government’s efforts in settling the Zesa debt and support for the utility’s negotiations with Eskom and HCB should give the country a temporary respite it desperately needs.

Of course, we look ahead to the conclusion of long term efforts such as the completion of the expansion work at Hwange Thermal Power Station, the beginning of the proposed 2 400MW Batoka Hydro plant at the Zambezi and solar projects elsewhere in the country.