18 February 2013

Zimbabwe: Zesa Owed U.S.$730 Million

THE amount owed to Zesa Holdings by customers has ballooned to US$730 million since dollarisation of the economy in 2009, Zesa chief executive Mr Josh Chifamba has said. Huge corporates are the biggest debtors, accounting for nearly a third of the amount.

"The money we are owed has risen to US$730 million and of the total amount, domestic consumers owe us US$261 million," said Mr Chifamba in an interview last Friday. "This puts us in a very tight position (in terms of viability)."

Zesa embarked on a rollout programme of prepaid meters last year in a bid to improve revenue inflows, but this is moving at a much slower pace than anticipated due to funding problems. By last month, Zesa had installed only 55 000 prepaid meters in domestic premises countrywide since August last year against a target of 600 000 households. A number of analysts have blamed Zesa for a poor debt management system which failed to recover money owed by consumers.

Other analysts have blamed the Government's policy which prohibits disconnections of defaulters.

Zesa has failed to expand its power generating capacity due to financial challenges. Power shortages have spawned rolling power cuts to industrial, commercial and domestic consumers.

There are fears that the shortage would worsen as economic activity improves. Industry is running at an average of 44,5 percent production capacity due to a number of factors, chief among them lack of power and funding. Industrial capacity stood at about 57 percent last year. A number of mining companies, including Impala Platinum Mines -- the majority shareholder in Zimplats -- have expressed concern over the power supply situation, which they say might slow down planned expansion.

Last year, a Chinese firm, Sino Hydro, won a contract ahead of five bidders to build two units at Kariba, with generating capacity of 300 megawatts at a cost of US$368 million. Bids for Hwange Thermal Power Station expansion are being analysed.

The two remaining bidders for Hwange - Sino Hydro and China National Machinery Corporation - are also from China.

Sino Hydro has submitted a US$1,4 billion bid for the expansion of Hwange for an additional 600 megawatts.

Last year, the Zimbabwe Energy Regulatory Authority said it had licensed 11 investors with a potential to produce 5 400 megawatts in the next three to 10 years.

Zimbabwe is currently generating 1 400 megawatts against a demand of 2 200 megawatts at peak.

Meanwhile, Zera has appointed a South African consultant firm, Norconsult, to carry out a cost of supply study of electricity for the purpose of coming up with a viable and economic tariff for both electricity supply service providers and consumers.

The last study was carried out in 2004. Zera held its first consultative meeting with stakeholders last Friday and the second meeting is scheduled for the end of next month.

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