Minister of Energy and Power Development Soda Zhemu has ruled out USD electricity payment for domestic users while admitting that government's inability to repay investments in foreign currency has crippled Independent Power Producers (IPPs).
Zhemu, during a Parliamentary Question And Answer session said the government will keep collecting electricity payments in ZWD until it ascertains that domestic users are earning their income in USD.
According to Zhemu, only companies producing wares for export and whose revenue has a USD component are required to settle their electrical payments in foreign currency.
"We have some companies that are producing their wares for export and those are supposed to pay their bills in foreign currency. We have exporters, those that are producing 80% of their wares which find their way out of the country, they are regarded as exporters and they are supposed to defray their bills in foreign currency.
"Then we have partial exporters, those that are above 35% but below 80%, they also have a portion which they are supposed to pay in foreign currency," Zhemu said.
He added: "What we may not do immediately is to ask the domestic consumers to pay their bills in foreign currency. That, we will not do in the interim until we have ascertained that they are earning their income in foreign currency."
Despite receiving ZWD from domestic electricity users, the government instituted a mechanism to preserve tariffs at US$0.1063 equivalency but being in local currency.
Meanwhile, MPs challenged the minister on ZWD payments, which according to Harare North MP Rusty Markham, were undermining IPPs.
"Mr. Speaker, the IPPs are already on their knees because they borrowed and invested money all in United States Dollars.
"The payment from the Government of Zimbabwe is in Zimbabwe Dollars local which the Government insists on. Can the Minister apprise us on what he plans to do with these people, particularly when the interbank rate is starting to move rather quickly," queried Markham.
In response, Zhemu said IPPs were protected by Government Implementation Agreement policy which secured investments against the risk of currency convertibility.
He however admitted that investors were facing challenges in repaying the USD loans they would have procured for the projects owing to the government's failure to reimburse in foreign currency.
Zhemu added: "It has been an issue for quite some time where investors would bring their money from outside the country, develop a project in Zimbabwe but at a time when they wanted to repay for the loans that they would have procured for the purposes of developing that project, it was a nightmare for them.
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"Also, when project developers were intending to expatriate proceeds of their investments outside the country, they were facing that challenge due to the issues of our currencies.
"It is not about unwillingness by the power utility to pay project developers in dollars. It is because the money is not adequate."
Zimbabwe is currently losing much of the foreign currency in importing electricity.
"When we have fully replaced that power, the power that we are importing with what we are generating locally then we will stop importing and when we have stopped importing, obviously we will be able to pay IPPs in dollars but as we speak, the capacity is not there.
"ZESA is not able to pay for power imports including power that is locally generated from independent power producers in foreign currency," claimed Zhemu.
