REGIONAL power suppliers could switch off Zimbabwe after the country’s integrated power utility, ZESA Holdings, failed to meet prepayment arrangements for power imports, the Financial Gazette can report.
The Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a subsidiary of ZESA, has defaulted on payments for power supplies from Eskom of South Africa and Hydro Cahora Bassa of Mozambique. It has also failed to pay for power supplies from a sister firm, the Zimbabwe Power Company (ZPC) and the Dema Diesel Power Plant, which was constructed by private players recently to plug a generation gap in the country.
The Financial Gazette is reliably informed that ZESA owes the four suppliers about US$734 million.
Of this amount, US$715 million is reportedly owed to the ZPC and Dema Diesel Power Plant, whose establishment was a subject of contention between government and ZESA.
Mozambique’s Hydro Cahora Bassa, which is owed US$10 million, has already reduced by half its supplies to Zimbabwe, from the 100 megawatts (MW) to 50 MW.
South Africa’s Eskom, which is owed US$8,8 million, told the Financial Gazette this week that it would demand that Zimbabwe adheres to a prepayment arrangement to guarantee electricity supplies to the country.
Eskom’s spokesperson, Khulu Phasiwe, said: “The arrangement with Zimbabwe’s ZETDC will continue to be on prepayment. That’s the nature of the contract. If ZETDC are having problems paying in advance for electricity from us then they will have to wait until they have money for it.”
Phasiwe added: “We are not targeting Zimbabwe only. We do the same with all our customers within the Southern African Power Pool. Even with all our clients here in South Africa, we are migrating to pre-payment arrangements. We have found that after we supply electricity, some clients would come to us and say we didn’t order.”
ZETDC managing director, Julian Chinembiri, confirmed that Eskom, HCB and Dema could disconnect ZETDC due to the huge payment arrears.
“Power supply is seriously compromised at the moment,” said Chinembiri, adding: “About US$734 million is outstanding for power purchases. This may lead to failure to procure power leading to load shedding. ZPC is owed a lot of money, threatening (local) generation.
“Eskom, HCB and Dema require upfront payment. But their accounts are now in huge arrears hence threatening to disconnect us,” Chinembiri said.
He said last year alone, the ZETDC reduced supplies to the market by more than 1 813 gigawatts hours (GWh), and this potentially prejudiced industry and commerce business worth more than US$5,2 billion.
“The situation is bad because (power suppliers) are calling us everyday threatening to cut us off if we don’t clear our arrears. It has been clearly demonstrated that ZETDC is in an extremely precarious situation arising from a sub-economic tariff. It has now become difficult for us to be able to pay since our proposal for a tariff increase was rejected by government.
“The decline of a tariff (increase) to ZETDC has dire consequences on the company’s performance and its ability to anchor the economic recovery to be realised from the Zim-Asset strategy,” Chinembiri said.
Energy and Power Development Minister, Samuel Undenge, is under increasing pressure to keep the country’s power sector relevant to Zim-Asset — a government economic blueprint called Zimbabwe Agenda for Sustainable Socio-Economic Transformation.
Managed blackouts were last experienced in December last year when households and businesses endured long hours of supply disruptions.
Owing to low generation capacity, largely due to low water levels at Kariba Dam, which supplies water for power generation at Kariba Hydro Power Station, and inefficiencies at the power utility’s four thermal power stations across the country, Zimbabwe turned to regional power utilities to augment poor production.