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Foreign currency shortages threaten power imports, as ZESA warns of massive load shedding

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Foreign currency shortages threaten power imports, as ZESA warns of massive load shedding

HARARE, ZESA Holdings says it is being allocated $1.5 mln per week against its $5 mln requirement for power imports.

Group chief executive officer Eng Josh Chifamba told a parliamentary committee on Mines and Energy that the allocated funds are not enough to service accounts owed to South Africa’s Eskom and Hydro Cahora Bassa of Mozambique.

He added that the country risk massive load shedding should Eskom and HCB consider terminating power import agreements due to debts owed.

“We are not getting enough funds from the Banks to service those accounts.  We have had to come up with some innovative ways where we are talking to our customers who are in the export business so that they seed  to us part of their returns from their export proceeds so that they can help alleviate the problems.

“But this will be additional money to what we are being allocated by the Central Bank, so there is a serious challenge and should that continue we will go to massive load shedding,” he said.

Zesa owes Eskom $18 mln, Hydro Cahora Bassa $9 mln and $8 million to the Dema power project.

Chifamba said Eskom’s average monthly bill is about $7.5 mln for energy of about 42GWh and Zesa only imports when it requires the power and the tarrifs are a function of time of use.

HCB average monthly bill is $2.6 mln for energy of about 63GWh while Dema’s bill is $7.5 mln for energy of 42GWh per month.

Zimbabwe’s depleted nostro position has seen various importers failing to pay their foreign suppliers on time resulting in shortage of critical raw materials and services which are affecting production.

Commenting on Zesa’s power projects Chifamba said the country’s total installed capacity is far below demand and supply has only stabilised due to low demand and the installation of pre-paid meters which now account for 40% of the groups’ revenue.

“We have seen improved power supply largely because demand of power is low both from the region and locally largely driven by low commodity prices particularly of ferrochrome which resulted in many sector operators closing operations,” he said.

He said with improved revenue collections due to prepaid meter installation the group is now able to purchase power from the region.

However, Chifamba said delivery of the phased prepaid meters installation is being constrained by inadequate foreign currency allocation.

He said while 99% of phase one which commenced in 2012 is complete, phase two which involves installation of 100 000 meters has already begun and will complete in Q1 2017.

“The meters for phase 2 have started coming in. To date 11500 meters out of 130 000 on order have been delivered .However the bulk of these meters are being installed on new points that have waited for service for long periods. The delivery of meters is being constrained by inadequate foreign currency allocation,” said Chifamba.

On the state of existing power generation projects Chifamba said the first unit at Kariba South expansion will come online in Q2 2017 and second unit in early 2018.

The Hwange expansion which requires at least $1.5 bln is still awaiting financial closure. Other projects which include the repowering of the country’s mini thermal stations are at difference stages of implementation.

Meanwhile, according to RBZ, the bank has arranged $215 million nostro stabilization facilities to close the gap which had resulted in delays in the remittances of outgoing foreign payments by banks and the importation of cash.

Of the facilities $150 million would be availed by Afreximbank at rates of under 7% while $65 million would be coming from Swiss Bank.  Further to that, the central bank is in negotiations for $330 million from regional sources to enhance production and improve liquidity in the country.

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