Zim power imports gobble US$20m monthly
Zimbabwe, which is blighted by long periods of debilitating and costly loadshedding, is coughing up US$20 million of scarce forex on electricity imports every month, State power utility Zesa Holdings executive chairman, Dr Sydney Gata, has revealed.
Dr Gata said in an interview this week that Zimbabwe was importing between 200-400 megawatts from the region because the Treasury, for over two years, has been sitting on an implementation agreement for independent power producer (IPP) projects.
The agreement would have resulted in the development of currently stalled IPP projects with significant output potential. In fact, Dr Gata contends Zimbabwe should, at the very least, be exporting excess power.
Demand for power in Zimbabwe reaches about 2000 MW, at peak, but the country can at best only produce roughly 1 400 MW due to limited installed capacity and plant facility issues.
The gap between demand and supply is now being minimised through imports, which sees the country part ways with over US$20 million each month, and load shedding, which usually stretches for 12 hours a day in some cases.
Dr Gata said 20-35 percent of electricity imported by Zimbabwe from both Zambia and Mozambique, came from IPPs while the sector’s contribution to domestic generation in Zimbabwe stood at a meager 1,5 percent.
Asked how the agreement Treasury has not signed could help end the rolling power cuts engulfing the entire country, he said, it was critical for State guarantees project developers needed to source outside funding. The Zesa Holdings executive chairman said licensed IPPs in Zimbabwe had potential to generate 6000 MW, of which there was a realistic
possibility 600MW could easily be actualised.
This amount, Dr Gata said, was far more than the country needs to secure adequate supply and do away with expensive imports, which are gobbling huge amounts of the forex industry desperately requires.
Zimbabwe’s domestic currency is failing to hold steady against the greenback on the black market due to limited US dollar availability, which drives speculation that hurts the economy.
The Reserve Bank of Zimbabwe runs weekly auction system, a major source of affordable forex, is saddled by nearly US$200 million backlog resulting from shortages of hard currency.
Meanwhile, Dr Gata said the state power utility had taken measures to dilute the impact of the power deficit by seeking imports from EDM of Mozambique and ZESCO of Zambia.
He indicated that Zesa had negotiated for 280 MW from Zambia and 180 MW from Mozambique, where the country will get supplies after clearing an outstanding payment for earlier supplies.
Recently, Dr Gata also attacked Government, specifically the Permanent Secretary in the Ministry of Finance and Economic Development, George Guvamatanga for stalling the IPPs.
In response to the accusations that he was stalling projects last month, Guvamatanga said it was unfortunate that there is a thinking that an institution such as the Ministry of Finance can be personalised (by himself).
He refused to be drawn into a public/media spate and said it is not appropriate to run Government business in newspapers when there are laid out channels to be followed.
Further, Guvamatanga said, such issues should be addressed between Dr Gata’s parent ministry (Ministry of Energy and Power Development) and the Ministry of Finance.
Guvamatanga chairs the External and Domestic Debt Management Committee (EDDC), which also has in its composition the Governor of the Reserve Bank of Zimbabwe; the Attorney General; Secretary of Line Ministry (as and when necessary); and the Zimbabwe Public Debt Management Office (ZPDMO) as secretariat to the Committee.
When it comes to issuing out some guarantees, the EDDC Working Party (WP) evaluates and assess the application using the credit risk scoring evaluation.
The EDDC WP submit to the EDDC, results of the evaluation and assessment, including recommended decision on level of guarantee and fee(s).
The EDDC deliberates on EDDC WP recommendations and recommend decisions to the Minister of Finance. The Minister of Finance approves or does not approve the guarantee taking into consideration recommendations from the EDDC.
Guvamatanga said he can thus not be blamed adding that if there are any issues with him, the matter could be escalated to the Minister of Finance and Economic Development.
Zimbabwe’s major power generation facilities are the 1 050MW Kariba South power station, a hydro-electricity plant and the 900 MW rate Hwange Power Station, which fired with coal.
While Kariba South has some challenges firing at full throttle due to limited water availability after two consecutive years of drought, Hwange frequently breaks down due to its old age.
HPS, which was completed in the mid 80s, has outlived its design lifespan, which reduced its reliability and output potential and averages just about 450MW when operating at full potential.
The Government has since enlisted Sinohydro of China to undertake capacity expansion to add 600MW at Hwange. The project, slowed down by Covid-19 restrictions globally, has reached 72 percent completion and will connect to the grid by end of 2022.
Notably, Zesa has seen little progress on planned refurbishments of its small thermals in Bulawayo, Munyati and Harare, which can generate an average of 100 MW individually.
The Government of Zimbabwe is also working with Zambia on the development of the Batoka Gorge project, which could add 1 200 MW to the grid from generators on the Zimbabwean side.
Both countries entered a memorandum of understanding (MoU) for the development of the project in February 2012. The African Development Bank (AfDB) Group was named as the lead financier and co-ordinator for the $5,2 billion project in April 2017.
Construction activities on the project are expected to be started after reaching financial closure in 2019, while commissioning is expected after 2024. The bi-national project is expected to create approximately 6 000 employment opportunities.-ebusinessweek
