Zimbabwe’s power group owes $18m to Eskom

By Tawanda Karombo Time of article published Nov 23, 2016

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Harare - The Zimbabwean Electricity Supply Authority (Zesa) has warned that the current dollar crunch could result in its foreign electricity suppliers such as Eskom and Mozambique switching the country’s power off.

The power utility has been plagued by foreign currency shortages and liquidity for key payments, which has forced it to import power in the past few years to plug a power generation deficit that is afflicting productivity.

Read also: Harare's cash crunch could spark power cuts

Eskom supplies 300 megawatts to Zimbabwe at a cost of nearly $10.5 million (R150.43m) a month, while Mozambique’s Hydro Cahora Bassa (HCB) exports $2.6m worth of electricity to the country.

Zesa chief executive John Chifamba this week warned that the country might not be able to meet its debt obligations to suppliers as it did not have a steady supply of foreign currency.

“As we stand now we are in serious arrears on both accounts: Eskom of South Africa and HCB of Mozambique,” Chifamba said.

Severe cash shortages have meant that Zesa was only getting about $1.5m of the $5m it requires for its weekly energy bills. Zimbabwe has maximum electricity generating capacity of about 1 100MW against peak demand of more than 1 400MW.


It has embarked on upgrades of its aged power plants at Hwange and at Kariba, while also awarding contracts for independent power producers.

There is also an emergency diesel power plant run by Sakunda Energy at Dema that is supposed to be paid about $7.5m on a monthly basis to keep the lights on.

On Monday, the Reserve Bank of Zimbabwe (RBZ) said that fuel companies were being allocated foreign exchange on a weekly basis to meet their monthly requirement of about $50m to bring petrol and diesel into the country.

“The RBZ and banks continue to put priority on foreign exchange utilisation to the importation of fuel, electricity and raw materials for the manufacture of basic commodities,” the bank said.

Eskom is owed $18m in outstanding bills while HCB is owed about $9m.

Zesa warned that if it did not speedily access foreign currency, it could be forced to institute “massive load-shedding” which could further afflict productivity in Zimbabwe.

Chifamba said the government’s reluctance to approve a hike in power tariffs was worsening its prospects.

He said Zesa had had to resort to levying its customers a portion of their current power purchases to recover outstanding debts.

“The utility was not awarded a tariff increase since 2011 and there has been no financial provision for the temporary emergency power and this has negatively affected financial position for the utility,” Chifamba said.

“The loss as at the end of September 2016 was $140m and is projected to rise to $223m by the end of the year,” he added.


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