Coal producers in cash flow challenges
DESPITE improved payments by ZESA Holdings for coal supplies, producers say they are still facing cash flow constraints and implored the power utility to pay upfront.
“The current payments are between 60 to 90 days down from 120 plus, but the problem is persistent as all our costs are prepaid, save for labour and ZESA payments should be in line with the prevailing expenditures of the coal sector,” Ray Mutokonyi, chairman of Coal Producers Association said in an interview yesterday.
Mr Mutokonyi said coal miners were owed nearly $1,1 billion by ZESA, which consumes 90 percent of local coal output “and this is constraining our operations.”
“There is an improvement in terms of payments but we still face cash flow challenges and we have been pushing for payments from Zesa day in and day out,” said Mr Mutokonyi.
Engineer Wellington Maphosa, acting managing director of Zimbabwe Power Company, the electricity generation arm of ZESA, declined to comment saying he has no authority to talk to the Press.
About six firms are supplying coal to Zesa’s Hwange thermal power plant and other smaller stations in Harare, Bulawayo and Munyati.
Energy and Power Development Minister Zhemu Soda, said it was important for Zesa to settle the debts in local currency to ensure the viability of the coal producers.
“Certainly we are doing something to ensure Zesa settles its debts to give capacity to coal suppliers to continue producing this critical commodity,” said Minister Soda.
Last week, Minister Soda said an agreement requiring ZESA to pay half of coal supplies in foreign currency has been set aside.
In April last year, Zesa and coal miners agreed that 50 percent of coal be paid in foreign currency, but the agreement had not yet been implemented due to incapacitation of ZESA. The agreement was supposed to take effect from April 14.
The deal had been hammered to support miners that badly needed hard currency to sustain operations in light of forex shortages that were prevailing at the time.
Minister Soda said the availability of foreign currency had since improved after Reserve Bank of Zimbabwe launched the foreign currency auction system in June last year.
ZESA is being paid in foreign currency by some exporters, particularly mining companies and the deal entailed coal miners be partly paid in forex to support operations.
This relates to continuous recapitalisation and procurement of spares, fuel and consumables.
Low coal uptake by the manufacturing sector, traditionally one of the biggest consumers of fossil fuel, has seen thermal power plants consuming much of the commodity.
There has been a low uptake of coal by tobacco farmers who continue using firewood for curing their crop. Coal miners are supplying very little coke products to copper smelters in Zambia and the Democratic Republic of Congo.–herald.c.z
