Though the power situation in the country stills remains dire it seems there have been some marginal improvements lately. Daily peak power demand in Zimbabwe is 1800 MW yet a total falling below 1000 MW is being produced by local power producers. The ministry of energy has been more invested in endeavouring to strike a working relationship with Eskom. That is why for quite a while now the government, through that ministry, has been negotiating with Eskom. The major focus of the negotiations has been reaching an arrangement on how the debt ZESA owes Eskom can be cleared. This has been a central theme because Eskom made it categorically clear that any unlocking of more power to Zimbabwe would have to be preceded by the clearing of the debt.
Debt Payment Framework
Sometime last month ZESA and Eskom reached an understanding on the payment of the debt. The total amount owed Eskom is to the tune of US$33 million which the government assured they would honour. The agreement was that the government would pay US$890 000 every week towards honouring that debt. The agreement is anchored by a guarantee from a regional bank of US$15 million. The government has also promised that they’ll avail Eskom with reports to that end every week. This has seen the unlocking of 400 MW into our grid. That’s probably why in some areas there has been some form of improvement regarding load shedding.
Eskom has emphasised that payments must be done consistently and timeously. Failure to honour a due payment by even a day will not be tolerated. There will be no leniency and any incident equivalent to non-payment or late payment will force Eskom to engage the guarantee. They have said that if Zimbabwe drops the ball they will definitely consider cutting off any power exports to Zimbabwe. The reason why Eskom is being this strict is most probably emanating from some developments obtaining in SA. Not too long ago Eskom highlighted operating losses amounting to US$1 billion in a recent report. With that background, the SA government has felt that Eskom striking an agreement with Zimbabwe is way too risky. So the logic behind Eskom’s stone-hard stance on its agreement with Zimbabwe is definitely being fed into by pressure from the SA government. The scepticism towards Zimbabwe isn’t surprising at all given our poor track record in honouring debts.
More Debts Need To Be Repaid
Our government also owes Hydro Caborra Bassa (HCB) of Mozambique US$47 million dollars. So that’s another negotiation exercise that needs to be started as soon as possible. It has been indicated that the negotiations will start this coming week. Presently there are no power exports to Zimbabwe from HCB. HCB had since decided to stop exporting any power to us given the accumulating debt. When all was well, Zimbabwe used to import 50 MW from HCB – enough to power up a small town.
Hwange Also Rocked By Challenges
Coal production has been rocked with a myriad of challenges. Actually, it was reported that local coal producers currently have barely a month’s supply of coal. One of the major causes of this has been the erratic access to fuel – particularly diesel which most their machinery run on. That has also been coupled with the ever-increasing prices of fuel.
Electricity Tariff Hikes
The other recent development was the hiking of electricity tariffs. We’re yet to see how this will address the current power situation because I personally don’t think it was the best move. I know it might contribute positively to improving ZESA’s financial status but at the same time, it can also encourage more people to explore alternatives thus consuming less power.
The government also recently approved a waiver on the importation of solar products as a way to encourage widespread use of solar power. There have also been reports that ZESA has started switching off defaulters – which is a necessary move. As I have always said, the US$1.2 billion owed ZESA must be recovered as it would go a stretch in resolving the power utility’s financial challenges. Overall, the current power crisis seriously makes Zimbabwe very unattractive for any prospective investors. No investor would want to invest in a country where most areas go for, on average, two-thirds of the day without power. That combined with fuel scarcity and cost would make doing business locally quite unsustainable.