8 November 2012

Zimbabwe: Zesa Blamed for Industrial Woes

THE Confederation of Zimbabwe Industries (CZI) yesterday intensified pressure on government to either "disband" cash strapped power monopoly, ZESA Holdings or break its perennial grip on electricity generation to arrest a deteriorating power crisis hitting the manufacturing sector.

CZI has previously exp-ressed reservations over what it describes as mismanagement at ZESA, but the fresh demands to disband it showed the extent to which fresh problems dogging the economy had sucked out industry's patience over inefficiencies at the state-controlled power monopoly.

In its 2012 manufacturing sector survey report released in Harare yesterday, the CZI said ZESA's monopoly bred inefficiencies, "discouraged proper business management" and "fuelled corruption and lack of innovativeness".

ZESA's facilities have an installed capacity of 1 960 mega watts (MW), against national demand estimated at about 2 200MW.

An ambitious target to restore the troubled national power utility's full capacity by the end of 2012 through fresh investments in Hwange thermal and Kariba hydro power stations has not been met.

Industries continue to endure worsening blackouts and thousands of jobs are on the line.

The CZI said the escalating power crisis, blamed for the decline in manufacturing sector output and capacity utilisation, required swift intervention to save an industry already battling antiquated equipment, lack of funding, working capital problems and capital flight.

"The issue of power cuts remains a great impediment to industrial performance," the CZI said in the report.

The report said survey participants had suggested the breakup of ZESA Holdings whose monopoly is discouraging proper business management, fuelling corruption and lack of innovativeness and efficiency.

It highlighted that there was need to focus on the development and encouragement of use of alternative sources of power, especially for domestic consumption.

"Government needs to facilitate foreign direct investment and private sector participation in power generation and/or importation," said the CZI.

There have been calls for the privatisation of the power company to encourage private capital inflows which, across Africa, have been credited for resurrecting failing state firms.

In Zambia, for instance, the privately run power company, Copperbelt Energy, has been driving the growth of the mining industry after being launched to specifically fire the country's privatised copper mines.

It complements the role being played by State-owned electricity distributor, ZESCO.

Copperbelt Energy's chief executive officer was in Zimbabwe last year scouting for similar opportunities.

The CZI report said ZESA, which has been accused of taking advantage of its monopoly to charge exorbitant tariffs, must come up with a new billing system.

"The suggested remedies for the perennial power crisis were suggested as follows: In the short-term, there is need to prioritise the rehabilitation and maintenance of existing infrastructure," said CZI in explaining the survey.

The other remedy suggested by industry players was to "ensure that adequate resources are set aside for energy development. It was even suggested that government link mineral resources to energy development. In addition to ensuring availability of resources there is need for government to prioritise the completion of projects such as Batoka that will boost local generation capacity".

CZI's report expressed fears about the state of infrastructure and called upon local authorities to improve service delivery to help rebuild the country's manufacturing sector.

It said roads were in a sorry state while the railway network, critical for shipping bulk goods, had collapsed.

These weaknesses, said the CZI, where added costs to companies in an environment already hostile to doing business.

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