15 June 2012

Zimbabwe: Zesa Loses U.S.$187 Million Through Blackouts

Widespread load shedding by power utility ZESA Holdings, which crippled industries and paralysed social services, cost the troubled firm US$187 million in potential revenue in 2010 alone, a power sector report has revealed.

The report titled Electricity Tariffs Review presented at the Confederation of Zimbabwe Industries (CZI) Annual General Meeting (AGM) recently said the Zimbabwe Electricity Transm-ission and Distribution Company (ZETDC), a ZESA subsidiary that sells power, received 10?131 gigawatt hours (GWh) through imports and local generation in 2010.

About 8 701GWh were used in Zimbabwe while 987,9GWh were exported, mostly to Namibia.

The report, which was prepared by the CZI in conjunction with the Chamber of Mines of Zimbabwe, indicated that 2,659,783GWh were load shed during the period, representing US$187 million in lost sales.

"Total system losses are 20,1 percent compared to KPLC (Kenya Power & Lighting Company Limited) total losses at 16 percent. The four percent difference (with KPLC) in losses represents US$3,7 million loss to ZETDC," said the power sector report.

ZESA Holdings reported US$36,2 million in losses in 2010.

The report queried the Zimbabwe Electricity Regulatory Authority (ZERA's) business model, suggesting a complete review.

"ZERA has adopted the "single buyer" market model as a transitional structure. ZETDC is the sole imp-orter/exporter and purchaser, transmitter, distributor and supplier of electricity. The single buyer model is an impediment to investments in the power sector and should be done away with immediately," said the report.

"Why can't farmers (for instance) take over the electricity distribution "wires" in their areas? Why can't Victoria Falls be responsible for the distribution and supply of power to itself? Competition should be introduced into the supply side of the electricity sector as in the petroleum sector," the report added.

"The load shedding is affecting many businesses especially irrigation farming. Wheat and barley farming are under threat impacting upstream industries. Due to the unscheduled load shedding, a lot of equipment is being damaged," said the report.

Power problems have worsened in Zimbabwe in the past decade with ZESA failing to settle its power import bills on several times.

In March, Mozambique temporarily halted power exports to Zimbabwe to force ZESA to settle part of a US$75 million outstanding debt.

Zimbabwe imports 35 percent of its power requirements from three regional producers.

These include Mozambique's Hydro Cahora Bassa of Moza-mbique, the giant power plant that generates 2 075 MW of electricity.

The troubled power company is undertaking a programme to add 600 MW and 300MW in new generation capacity at its Hwange and Kariba power stations respectively. This is, however, a long-term project that demands extensive capital expenditure outlays.

In its January 2012 edition of the Megawatt Monthly, ZESA indicated that power generation had increased by 19 percent in 2010. However, there is veery little or nothing on the ground to show for the improvement in output.

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