Two of some of the most problematic areas in the country right now are electricity and fuel. Load shedding still characterises most areas in the country as many of you can confirm. I was in Victoria Falls last weekend and I noticed that even in key tourist destinations like that load shedding also occurs. Some areas have sort of improved in terms of power supply but the improvements have been marginal and mostly inconsistent. Fuel also has been and continues to be a challenge. Fortunately, driving to Victoria Falls last weekend fuel was available back home and had to carry 50 litres along (which is a testament to how inconsistent fuel supply is). Both electricity and fuel prices have been increased over time with fuel prices actually having been hiked this morning. So what is the government saying about all this?
Senate Question And Answer Session Held Recently
Last week Thursday there was a Senate Question and Answer session that was convened in Harare. During the session the Advocate Fortune Chasi (the Minister of Energy and Power Development) highlighted that foreign currency shortages are crippling the sufficient and consistent supply of electricity and fuel in the country. Some time back the government reached a working agreement with Eskom that saw Eskom channelling 400 MW into the local grid. This was after the government through ZESA had agreed to a weekly payment plan to deal with the debt that Eskom is owed. After that agreement government has indicated that it was going to engage Hidroelectrica de Cahora Bassa (HCB) over a debt they owe them. It seems they managed to reach yet another working agreement that will see a further 100 MW being channelled into the local grid from HCB.
Some Things To Note
I do find it quite interesting that the shortage of foreign currency is cited as the reason why electricity and fuel supply is erratic. I say so because I believe the shortage of foreign currency in itself is a symptom of several pertinent underlying problems – which must be addressed. Looking at it from another angle, most people posit that these foreign currency shortages are artificial because there are people hoarding the foreign currency and thus it is in the hands of a few. A few days ago I spoke to a friend of mine who said they recently saw a guy with cardboard boxes in his car filled with US$100, US$50 and US$50 notes respectively. This makes you realize that there a select few who have huge amounts of foreign currency thus leading to its scarcity. There is also incessant and unchecked government expenditure that is adding on to illicit and unethical activities on the parallel market. On another note, as far as electricity is concerned talking about foreign currency shortages suggests somehow that importing electricity is our best option – which I think is not. ZESA is owed many millions of US dollars and there are alternatives like solar that must be explored.
The scourge of foreign currency shortages is affecting virtually every local area industry in existence. Capacity utilization of most businesses or companies has plummeted with some even stopping operations completely. The issue of capacity utilization has actually been the major reason why Hwange power stations are not producing as much power. They are said to be operating at way below 50% capacity utilization and that has only worsened the electricity situation in the country. To compound that, coal producers have also gone down in terms of their capacity utilization thus affecting power generation at Hwange power stations. The same major problem being cited for all these players is foreign currency shortages. They are saying that they are lagging behind regarding servicing and maintenance of operating equipment – things which require foreign currency.
Though the available foreign currency seems to be unevenly distributed and in most instances abused, foreign currency generation also requires attention. Currently, the nation is predominantly importing way more than it is exporting due to a poorly performing industry. If we are to be candid it is the enactment of ill-advised and inconsistent monetary and economic policies that have set in motion this domino effect. The economy is in free fall and some experts are warning that with the way things are going to get even messier than they are now. So the most effective way to address foreign currency shortages starts with sound monetary and economic policies. There have been many calls for the abandonment of the bond – that really is a good place to start.