Commercial Farmers Union of Zimbabwe

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ZESA

ZESA technically insolvent

ZESA technically insolvent

via ZESA technically insolvent | The Financial Gazette by Phillimon Mhlanga 12 Dec 2013

POWER utility, ZESA Holdings, the custodian of government equity in the power sector, is technically insolvent and has a negative working capital, creating uncertainty in its ability to continue as a going concern.The situation could have worsened this year after government ordered the parastatal to write-off millions of dollars in electricity bills owed by consumers.

In its latest financial statement published last week for the year to December 2012, the company attributes its woes to outstanding legacy debts estimated to be in excess of US$600 million, which were not being serviced and are now treated as current liabilities.

Analysts fear that unless ZESA receives funding from government, the debt, which is part of the unresolved national debt, would weigh down the company.

ZESA’s current liabilities, which totalled US$944,9 million, far outstripped its current assets by US$479 million, implying that the company may not be able to meet its current liabilities as they fall due.

In the prior comparative period in 2011, the company recorded a negative working capital of US$505 million.

The financial statement showed that the company recorded a net operating loss of US$132,2 million in contrast to a profit of US$24 million in the previous year.

The electricity debtors book ballooned to US$785,1 million from US$650,9 million in the prior year.

However, there was a significant improvement in electricity sales, which increased to US$799,4 million from US$698,6 during the prior comparative period in 2011.

Board chairman, Simbarashe Mangwengwende, described the financial position as precarious.

“The financial position of the group continues to be weak largely due to the legacy debt,” said Mangwengwende in a commentary on the financial position.

“The group is technically insolvent because all outstanding legacy debt, which is not being serviced, is now treated as current liabilities.”

“Although we have an unqualified audit opinion on our accounts because of the letters of comfort from the shareholder, there is an emphasis of matter by the external auditors regarding the going concern status of the group due to the fact that the current assets for ZESA Holdings, ZPC, ZETDC and ZESA Enterprises are less than the companies’ current liabilities,” Mangwengwende said.

“Although this is the same situation for Powertel Communications, the auditors did not issue a similar emphasis of matter because of the very positive trend towards financial viability exhibited by that company.”

Powertel is another subsidiary of ZESA involved in telecommunications.

He, however, remained hopeful that the technical insolvency challenge could be addressed.

“This technical insolvency challenge will primarily be addressed by transferring the legacy debt to government and refinancing short positions on the balance sheet,” he said.

ZESA had hoped the restructuring of the group would provide an opportunity to start the debt transfer, a move that would have strengthened the balance sheets of the group’s subsidiary companies.

However, Energy and Power Development Minister,  Dzikamai Mavhaire, abandoned  the restructuring plan initiated by former minister, Elton Mangoma.

The restructuring was meant to create an efficient structure leading to a vibrant electricity market, capable of attracting investment and provisions of incentives for the efficient utilisation of electricity.

What has worsened the plight of ZESA is that when government issued the controversial directive to slash electricity bills, it was denied it the much needed revenue.

A government’s decree in September to cancel electricity debts wiped about US$80 million off its debtors’ book.

Government is now faced with a huge challenge to take action that can help heal the company which faced a negative impact on financial operations.

This situation presents a major challenge in attracting funds for new developments as it portrays a low credit rating for the electricity market in Zimbabwe.

To ensure that the entities continue as going concerns,installation of prepaid and smart meters  is in progress and is expected to be completed by January 2014, a development which will significantly resolve the problem of debtors.

On completion, cash flows are expected to improve as cash would no longer be locked up in receivables.

The group is also working on the expansion of Hwange Power Station and Kariba South Power station to add 600 megawatts(MW) and 300MW respectively to the national grid.

The Zimbabwe and Zambia governments are also working on the Batoka Project which has an estimated combined output of 1 600 MW and is being driven by Zambezi River Authority.

Power outages push company overheads

Power outages push company overheads

via Power outages push company overheads December 10, 2013  by Victoria Mtomba NewsDay

LOCAL manufacturing firms and mining companies are incurring as much as $8 in costs for every kilowatt hour (kWh)lost due to idleness resulting from frequent power outages, a study by a industrial lobby group has shown.

Speaking at a power sector symposium yesterday, Confederation of Zimbabwe Industries energy and environment committee member Marsden Sibanda said the perennial energy crisis besetting the economy was not only making local firms uncompetitive, but was also threatening the viability of key economic sectors.

He said there was need for strict adherence to the load-shedding schedule per industrial area. He also said a separate plan was needed for intensive energy users.

“At $0,12 per kWh from Zesa or Zimbabwe Electricity Transmission and Distribution Company, it is better than generator at plus $0,33, but recent studies $2,50 and $8,00 per kWh as costs of not having power for industry and mines respectively hence the need to work for a common Zimbabwe solution,” Sibanda said.

Sibanda said while the industrial lobby group fully understood that the power sector was not meeting the current energy demands, there was need to invest in the sector. Zimbabwe’s five power stations are currently generating 1 200 megawatts daily against peak demand of 2 200MW.

Capacity utilisation for the manufacturing sector this year dropped to 39% from 44% in 2012 due to a myriad of problems which include underfunding and frequent power outages.

Sibanda said there was need for clarity on the planned restructuring of Zesa which was announced before the July 31 elections.

Speaking at the same forum, Deputy Minister of Energy and Power Development Munacho Mutezo said government had since resolved to go back to the old Zesa structure and that it would not privatise.

Mutezo said government was implementing projects to address the shortfall since the country had old infrastructure that needed to be rehabilitated.

“We are also looking at investing in other power generating systems which have a short lead time especially solar generating plants as well as small hydros and peaking power solutions. We implore the private sector to come on board to also invest in this lucrative sector. This can give us extra power within a year or so,” he said

Zesa chief executive officer Josh Chifamba said the government had availed $69 million towards the Hwange Power Station rehabilitation while Zimbabwe Power Company contributed $35,29million towards the projects.

Chifamba said the projects undertaken included water systems, stage 11 air systems, electro hydro control system upgrade and stage 1 boiler feed pumps.

He said the power output could have been more, but during this period the power utility carried out maintenance works.

Power load shedding increases

Power load shedding increases

 
 

ELECTRICITY load-shedding around the country has increased over the last few days in response to ascending demand and breakdown of machinery at several power stations.

STAFF REPORTER

In some instances residents have had to go without electricity for four days every week. This is despite assurances by Energy minister Dzikamai Mavhaire that the power outages were set to ease.

According to the Zimbabwe Power Company (ZPC)’s generation status report of Wednesday, the country’s power stations – Hwange, Kariba, Harare, Munyati and Bulawayo – were only generating a combined total of 965 megawatts against demand of 1 630MW.

The report noted that internal power generation constituted 59,2% of the power supply. The country was only importing 100MW from Hydro Cahora Bassa in Mozambique and 120MW were exported to Namibia in honour of a deal between Zesa Holdings and Nampower.

The report attributed the decrease in power to broken-down machinery, major maintenance work, system disturbance and refurbishment of power units at the various power stations.

In Harare, station 2 was taken out of service on Tuesday due to a leak that developed on boiler 6 header cap. The station had to be taken out in order to conserve feed water which is critically low at the moment.

In Kariba, unit 3 was taken out early last month for remnant life assessment. Experts are mobilising to carry out the stator core repairs and re-tensioning. Work is expected to commence next week.

Unit 1 at Hwange was taken out of service on November 28. Repairs are in progress and the unit is expected back in service tomorrow.

Unit 5 was taken out on in early November for planned major overhaul works. The unit is expected back in service in February next year.

Unit 6 tripped on November 30 due to a system disturbance. The unit developed a tube leak. Repairs were completed and the unit returned to service yesterday morning.

Efforts to get a comment from Zesa were fruitless.

Zimbabwe is currently struggling to meet its energy requirements due to limited investment in the capital-intensive sector. Authorities say power shortages may ease in 2017 after government has completed several power generation projects on the cards.

Zesa to increase power charges

Zesa to increase power charges

via Zesa to increase power charges November 29, 2013  NewsDay

ELECTRICITY users should brace for tough times as the national power utility Zimbabwe Electricity Transmission and Distribution Company (ZETDC) plans to hike tariffs barely three months after it slashed debts for domestic consumers and farmers.

The power company yesterday announced that it had applied to the country’s energy regulator Zimbabwe Energy Regulatory Authority seeking to review its tariffs next year in a bid to boost revenue and improve operational efficiencies.

The development is likely to further pile pressure on consumers already bearing the brunt of an underperforming economy.

“The Zimbabwe Electricity Transmission and Distribution Company has applied to the Zimbabwe Energy Regulatory Authority for a review of the electricity tariff applicable to its customers in 2014 in terms of the provisions of section 53(1) of the Electricity Act (Chapter 13:19),” reads part of the notice.

“This application is seeking a review of the tariff to an average of 11,48c/KWh from the current 9,86c/KWh. This adjustment has been applied using the approved rate of return methodology. This tariff application is based on a revenue requirement $986 362 044 for 2014.”

ZETDC said it planned to raise additional funds to meet operational and maintenance costs and hedge against increased cost of electricity purchases. The electricity distribution company also hopes to improve service delivery, power supply security, infrastructure maintenance and availability and value for money.

Zimbabwe is currently struggling to meet its energy requirements due to limited investment in the capital-intensive sector. Authorities say power shortages may ease in 2017 after government has completed several power generation projects on the cards. As of yesterday morning, local power generation stood at 1 104 megawatts (MW) against a peak demand of 2 200MW.

According to a power generation analysis report provided by Zimbabwe Power Company, Unit 1 at Hwange Power Station was yesterday taken out of service while Unit 5 was taken out a fortnight ago for planned major overhaul works. The unit is expected back in service at the end of February.

Unit 6 was taken out of service on Sunday to enable boiler tube leak repairs and returned to service on Thursday. At Kariba Power Station, Unit 3 was also taken out a fortnight ago for remnant life assessment. Alstom are mobilising to carry out the stator core repairs and re-tensioning

Unit 5 was taken out of service on Wednesday to enable the disconnection of the unit transformer. The unit returned to service yesterday on the station transformer. In September, Zesa credited all domestic customers with a debt relief of $160 per household.

The collective debt relief for farmers was estimated at $80 million while that for ordinary consumers was $90 million.

The power authority has a legacy of debts of close to half a billion dollas that includes those debts taken over from Central African Power Company which used to procure power for the nation.

No power, no investors – Eddie Cross

No power, no investors – Eddie Cross

via No power, no investors says Eddie Cross  28 November 2013  by Charles RukuniInsiderZim

A senior Movement for Democratic Change official and Bulawayo legislator Eddie Cross says Zimbabwe cannot expect any substantial new investment until it is able to guarantee power to those investors.

He told Parliament on Tuesday that Zimbabwe’s economy was not going anywhere until the country resolved the issue of reliable power supply at the lowest possible cost.

“We cannot expect any substantial new investment in Zimbabwe until we are able to guarantee those investors power. Therefore, this issue is of critical importance to us as a nation and should be debated properly and clearly,” he said.

Cross said there were plenty of investors willing to support power generation in Zimbabwe but they were scared of the country’s indigenisation laws.

“There is no investor in the world that is going to put a dollar on the table and have fifty-one cents taken by ZANU PF,” he said.

Below is his full contribution:

MR. CROSS: Thank you Mr. Speaker. I feel that I should in fact make a short statement today on the question of electricity supplies in Zimbabwe because there is a lot of confusion and it is not assisted by this kind of debate.

The power generation facilities in Zimbabwe were built in stages; the small thermal power stations were built prior to 1938. Kariba was completed in 1958 and Hwange was built under United Nations Mandatory Compulsory Universal Sanctions between 1968-1970.

I mention the latter because I was a young man during those days. I participated in the construction of Kariba. Kariba at its time was the largest infrastructure development in the world financed by the World Bank.

Hwange was financed by the Rhodesian Government and the equipment was imported to Rhodesia under United Nations sanctions. I simply cannot understand why our associates on the other side of the House, should claim today that sanctions should be causing, in any way, the kind of crisis we are experiencing today. It is not true.

There are absolutely no restrictions whatsoever on the importation of spares of any kind to deal with any form of electricity generation infrastructure in Zimbabwe today. The power generation capacity of Zimbabwe is about 1200 MW today. It fluctuates a little bit based on the facilities at Hwange, but by and large, I think one of the greatest achievements of the past four years has been to stabilise the two major power stations in the country.

I am pleased to announce today that the contractors have moved on site at Kariba South. This is a major step forward. It is a contract negotiated by the former Minister of Energy and I think it is a good contract. It will be funded by the people constructing the facility and I hope that within three years, Kariba will be able to generate something like 900 MW for us as a nation.

It will not be creating any additional sources of supply because we do not have sufficient water in Kariba but will enable us to fluctuate the production from Kariba to meet our peaks in demand. This is a very important function.

Hwange, I am afraid Mr. Speaker, has been inexplicably delayed. It is in fact the only major new generation source of power to Zimbabwe today. It is capable of being financed today, without any problems at all.

It is a mystery to me as to why this particular contract, like Kariba South has not been awarded. I do not know what the hold-up is today but I would hope that the minister would be more transparent in the way he is handling this business and inform the House when he has the time, as to why this important contract has been delayed.

For the rest, Rhodesia always could depend on surpluses in other parts of Southern Africa for its shortfall in supplies. Therefore, no expansion in the production of electricity in Zimbabwe has been completed in the last 40 years, 34 of which have been under ZANU PF management.

More importantly, during this period, there has been absolutely no maintenance and no reconstruction of these important facilities. Now that the region itself, particularly South Africa, is moving into a deficit position in so far as their own requirements are concerned; these countries are no longer able to supply us on and when required, hence the load shedding.

As far as the future is concerned, Mr. Speaker, the Sengwa project has been on the books for some time, promoted by a major international company based in London, Rio Tinto. There is no question of any kind of restrictions on Rio Tinto regarding this investment. Rio Tinto is not proceeding with this investment simply because of the risk profile of Zimbabwe.

Part of that risk profile is indigenisation. There is no investor in the world that is going to put a dollar on the table and have fifty-one cents taken by ZANU PF. For that reason, Sengwa has not proceeded.

The same applies to Binga. There is another thermal station being planned in Binga. Plans for the thermal station are being funded by the French.

Again, there is no question of any restrictions on the financiers of this; it is the risk profile of Zimbabwe that is impeding these investments.

As far as gas is concerned in Lupane, I think most people now know that the gas in Lupane is not a reliable source of energy. It is unlikely to be developed on any significant scale. Therefore we have to ask, what are the immediate prospects for new energy sources for Zimbabwe?

I want to highlight the new role of Mozambique. Mozambique first found gas just about 150 km South of Beira about 20 years ago. That gas is being delivered to Gauteng today using a pipeline constructed by SASOL.

Recently, Mozambique has discovered major gas in the North near the Tanzanian border. This new discovery Mr. Speaker Sir, is going to turn Mozambique into one of the largest energy suppliers in the world.

These gas reserves are similar to those of Doha in the Middle East. It is going to transform the Mozambican economy. Already, more than US$100 billion has been committed to investment in the Mozambique gas fields.

The other development of concern to us is that just in the last two months, a gas field was discovered just off Beira, about 10 km from Beira port on the other side of the river. This gas field has 4 trillion cubic feet of gas which is bigger than the fields in the south supplying Gauteng. I am reliably informed that using this gas, which is only 183 km from Mutare, we can construct a 2 000 MW power station in Mutare within three years.

Contrary to what my colleagues on the other side of the House are saying, the Indian private sector is prepared to invest in that facility. The issue we have got to look at here is that this is a critical subject for every Zimbabwean; to try and make cheap political points about the so-called sanctions on this kind of issue is simply not doing it justice.

We need to debate this issue. We need to have clarity on it, the future of our economy –[MR NDUNA: Inaudible interjections]- you are quite right. Mr. Speaker Sir, my colleague is debating with me here.

MR. SPEAKER: Order, order, order. Please address the Chair.
Hon Nduna, please avoid direct verbal attack – [MR NDUNA: He is saying there are no sanctions.]- Order. May the hon. member continue please?

MR. CROSS: Thank you Mr. Speaker Sir. I just want to make a point that, until we resolve the question of a reliable power supply for Zimbabwe at the lowest possible cost, our economy is not going anywhere.

We cannot expect any substantial new investment in Zimbabwe until we are able to guarantee those investors power. Therefore, this issue is of critical importance to us as a nation and should be debated properly and clearly.

Thank you very much Mr. Speaker.

Zimbabwe gets $319 mln Chinese loan for Kariba expansion

Zimbabwe gets $319 mln Chinese loan for Kariba expansion

via Zimbabwe gets $319 mln Chinese loan for Kariba expansion | The Source  November 11, 2013  

China Exim Bank on Monday gave Zimbabwe $319 million to fund the expansion of Kariba Power Station project which could help reduce the electricity crunch that has hit the manufacturing and agriculture sectors.

The project will take four years to complete and is for two power generating plants of 150 megawats which would increase Kariba Power Station’s generating capacity to 1050MW. Kariba’s six generating plants produce 125MW each.

“This should go a long way in reducing power outages that characterise our power generation. For us the energy deficit has hamstrung the growth of our economy, “said Chinamasa at an event to sign the agreement with the bank.

Chinamasa said the loan has a two percent interest rate and a five-year grace period and a 20-year tenure. Zimbabwe will contribute $35 million to the project to bring the total cost of the project to $354 million.

China’s Sinohydro won the tender for the expansion work in December last year.

China Exim Bank executive vice governor, Zhu Hongjie said the project should be completed on time.

“We hope to complete it on time to bring benefit to your people,” he said.

Zesa slashes bills

Zesa slashes bills

via Zesa slashes bills – DailyNews Live by John Kachembere and Roadwin Chirara  1 NOVEMBER 2013

Cash-strapped Zimbabweans are set to get relief from national power utility Zesa’s decision to scrap electricity bills beginning today.

Josh Chifamba, Zesa chief executive yesterday confirmed to the Daily News that his company would not backtrack on its promise to cancel $160 from domestic electricity consumers starting November 1.

“We remain committed to fulfil our promises and I can assure you that some people have already begun to receive the adjusted electricity bills,” he said.

Chifamba, however noted that the bill adjustment would be implemented in a phased approach.

“It’s not possible for us to bill everyone at the same time. So others will be receiving adjusted bills in November,” he said.

The Zesa boss said consumers on pre-paid meters would also have $160 credited to their accounts.

“When our clients migrated to pre-paid meters, their debts were transferred to the new system and will have their accounts adjusted accordingly, while those with up to date accounts will be credited with $160,” he said.

This comes after the power utility last month announced a $170 million debt relief for domestic customers, resettled and rural farmers.

Zesa said the debt relief to customers was devised after extensive consultations with farmers’ representatives and other stakeholders as a way of contributing to the general economic recovery and success of the agrarian reform in anticipation of the new planting season.

Zesa’s move to slash electricity bills comes after local authorities were ordered by government to scrap water and housing bills running into millions of dollars.

In the run-up to the July 31 harmonised elections, government directed 92 rural and urban councils to write off debts owed by residents since February 2009 to June this year.

State-owned fixed telephone company, TelOne, also recently cancelled $80 million domestic debts in the wake of an increased liquidity crunch in the country.

Industry experts have however, warned that the slashing of bills might hamper the power utility’s efforts to increase power generation and reduce load-shedding.

“It was a well-considered decision and the scrapping of bills will not affect our operations,” Chifamba said.

Zimbabwe has been experiencing acute power shortages since August this year due to annual plant maintenance at Hwange Thermal Power Station and Kariba Hydro Power Station.

The southern African country — which recently roped in Namibia’s NamPower in the rehabilitation of its power plants — is currently producing 861 Megawatts (MW) per day and importing 50MW against daily demands of 2 200MW, resulting in excessive power cuts across the country.

To help alleviate the electricity shortages, government recently opened up the energy sector to private players as the country continues to struggle with its power deficit because of a weak economy and ageing machinery.

Proposed power generating projects are at different stages of implementation as the country gropes in the dark for a lasting solution.

With 11 projects still on the drawing board, only the Kariba South Extension plan has inched forward and promises 300 megawatts for the national grid.

The new Kariba plan however, requires $400 million to take off.

Another long-standing initiative is the Batoka Gorge project for four 200 megawatt power generators in the next six years. This massive scheme along the Zambezi River is projected to cost $2,2 billion.

Work on Batoka Gorge has yet to pass the bidding stages for a comprehensive environmental and social impact assessment and an engineering feasibility study.

Other proposed projects are the Gairezi hydropower station in Nyanga; an extension of the generation life cycle at Hwange; the upgrading of Deka pipeline; repowering schemes at Harare, Munyati and Bulawayo power stations, and a coal-bed methane project in Matabeleland North.

Zimbabwe recently tendered a $400 million solar power project for Gwanda, Plumtree, Munyati and Zvishavane areas as a short-term measure.

Nampower to finance Zim energy projects

Nampower to finance Zim energy projects

 
 

NAMIBIA power utility, Nampower, is expected to invest nearly $180 million to finance expansion projects at Harare and Bulawayo thermal power stations.

Bernard Mpofu

According to the Zimbabwe Power Company — a unit of State-owned power company, Zesa, Nampower has expressed keen interest in increasing generation capacity of the two power stations to 120MW as the country continues to grapple with power outages.

“The Namibian Power generation unit, Nampower, has once again shown interest in partnering with Zimbabwe to improve the local power situation. In August this year, a delegation from Namibia visited Zimbabwe Power Company and expressed their interest in funding the Harare and Bulawayo projects,” ZPC said.

“It will take about 24 months to complete. Harare Power Station will have a firm capacity of 120MW from the current 50MW, while Bulawayo’s firm capacity will increase from 30 MW to 90 MW.”

The repowering project will see the replacement of the current boiler technology with a circulating fluidised bed which was more efficient and cost effective.
The Harare repowering project, according to ZPC, went to tender earlier this year and was currently in the adjudication process.

“Harare power station is strategically located to supply power directly to industry in Harare and of late its dependable capacity had declined due to problems on the machines. This meant a gap had emerged thereby creating a deficit of power. The coming in of TA/2 with 30MW will help to reduce the power deficit currently affecting the nation and will ensure a dependable capacity to industries in Harare,” ZPC managing director Noah Gwariro said.

Nampower is a strategic partner to Zimbabwe and in 2007 funded the $40 million refurbishment of Hwange Power Station.

The power station, according to ZPC, now has all six units running and was generating 600MW out of its installed capacity of 920MW. The Nampower debt, according to Zesa was expected to be cleared later this month.

Zesa has been clearing that debt through power exports to Nampower.

Zimbabwe has a daily peak demand of 2200MW against supply of 1 200MW.

Turning to the expansion of Kariba hydro power station, Gwariro said the design review was in progress while the final report was expected by month end.

Govt mulls electricity tariff hike

Govt mulls electricity tariff hike

HARARE - Government is considering increasing electricity tariffs to make the price of power more “cost reflective”, Energy ministry’s permanent secretary Patterson Mbiriri said.

Zimbabwe is currently grappling with acute power cuts — as long as 18 hours a day — which have crippled both commercial and domestic consumers.

Mbiriri said the move is also part of strategies to attract more investors into the energy sector and ease load shedding.

“Our tariff regime is not rewarding enough and government has indicated that going forward electricity prices should be based on costs,” he told a consultative workshop on developing renewable energy feed-in tariffs for Zimbabwe’s electricity supply industry on Wednesday.

Mbiriri said that the tariff hike will take into consideration the country’s economic performance and consumers’ disposable income.

“People should be able to understand that it is better to have the power than not having it at all,” he added.

Zimbabwe’s electricity tariff is currently less than 10 cents compared to a regional average of 12 cents, a situation which has led to licensed independent power producers (IPPs) failing to bridge the supply deficit left by State-owned utility, Zesa Holdings (Zesa).

The country — with enough coal reserves to last the next 100 years — has internal generating capacity of about 1 200 megawatts (MW), far short of the 2 200MW national demand.

The southern African nation’s power stations are antiquated, built in the 1950s and designed for a smaller population, with little capacity added since independence in 1980.

In the past weeks, Zesa has intensified power cuts citing annual maintenance at Hwange Thermal Power Station and Kariba Hydro Power Station coupled with reduced electricity imports.

Most companies have been operating below capacity due to an insufficient and inconsistent supply of electricity, torching a heated confrontation between the power utility and the Confederation of
Zimbabwe Industries (CZI).

Industry, which is currently operating at 39,6 percent capacity utilisation has accused Zesa of impeding economic recovery through increasing tariffs while the hours of load shedding increased.

Hlanganiso Matangaidze, the Zimbabwe National Chamber of Commerce president expressed concern over the increase in loadsheding over the past few weeks saying it was detrimental to industry.

“At the moment only a few companies are operational as most companies closed shop due to operational challenges while capacity utilisation is very low.

“Increased load shedding is therefore a threat to the survival of those companies and we believe the power utility should at least spare industry from increased load shedding,” he said.

Farmer organisations in the country recently indicated that the irrigation of crops had been affected by lack of electricity while miners say they use a minimum of 5 000 litres of diesel to sustain their mining operations when they do not have electricity.

Consumers have not been spared and with increased load-shedding hours, most high density areas in the country are going for inordinately long periods in the dark.

Although the power sector reform process in the country is still on-going, progress has been constrained by the failure to establish a predictable and sustainable tariff-setting process.

Industry experts argue that whenever there is a significant gap between electricity prices and investment cost, it is imprudent to seek private sector investment on a nonrecourse project finance basis.

This is because existing assets will not be able to fetch prices that reflect their worth, while financial markets will not consider new project finance unless there is a predictable and sustainable revenue stream sufficient to cover the financing costs.

Government is however vigorously working on expanding Hwange Thermal Power Station units seven and eight and Kariba South Hydro Power Station for an additional 900MW, which is estimated to take up to 42 months.

China Machinery and Energy Corporation and Sino Hydro will undertake the expansions.

Govt Looks To Sugarcane Farmers To Alleviate Power Outages

Govt Looks To Sugarcane Farmers To Alleviate Power Outages

via RadioVop Zimbabwe – Govt Looks To Sugarcane Farmers To Alleviate Power Outages by Simplicius Chirinda

Mugabe’s Zanu PF led government is now desperately looking eastwards to sugarcane farmers to boost the country’s power generating capacity as shortages persist.

Dzikamai Mavhaire, the Minister of Energy and Power Development told Radio VOP that he will travel to Chisumbanje ethanol plant in Chipinge, Manicaland province on Friday to ask sugarcane and ethanol producers to consider pumping some of the power that they produce for their operations to the country’s starved electricity grid.

“I will be going to Chisumbanje to ask the producers of ethanol to feed some of the power that they generate at the plant into the country’s electricity grid. They produce excess power than they need

for their production so we are considering all options available to help solve the problem we are having,” said Mavhaire.

“It’s better for them to direct some of the power to the electricity grid because they have nothing to do with the excess power which is lost in the air,” he added.

The Chisumbanje ethanol plant powers itself and has the capacity to produce excess power which can be redirected into the country’s electricity grid.

According to the Zimbabwe Electricity Supply Authority (ZESA), Zimbabwe is currently producing less power to meet the national demand. And to make matters worse some power utilities in the SADC region among them Mozambique, South Africa and the Democratic Republic of Congo have stopped electricity exports due to rising demands back home and the failure by Harare to service its debts.

The country requires about 1 800 megawatts per day, but local power stations are currently producing only 1 100 megawatts leaving a huge power deficit which compels ZESA to effect load shedding.

Zimbabwe has not had any significant new investment in power generation since independence in 1980. It is currently negotiating a joint power generating project at Batoka Gorge with Zambia. So far the deal is stuck on cost sharing arrangements.

Government critics blame power outages, raw material shortages and government mismanagement for eroding the country’s manufacturing sector, a charge which the Zanu PF administration deny and blame on the sanctions imposed by western governments.

Power cuts jolt govt

Power cuts jolt govt

 
 

KARIBA — Energy and Power Development minister Dzikamai Mavhaire has threatened to cancel power-generating licences allocated to 12 independent power producers, accusing them of failing to boost electricity supply in the country resulting in persistent power cuts.

EVERSON MUSHAVA

Mavhaire, warning that those who, according to him, sabotaged the
Zanu PF election manifesto would face the music, said government would not tolerate companies sitting on power-generating licences while Zimbabweans were living in “total darkness”.

In an interview with NewsDay after touring Kariba Hydropower Station yesterday, Mavhaire said failure by the companies to operate was tantamount to holding the country “to ransom”.

“As the minister, I will not allow people to sit on licences while people are in total darkness. We will cancel all disused licences,” Mavhaire warned. “People used to complain that there is monopoly in power generation. We liberalised and gave them licences, (but) they sit on them. We will not allow a situation whereby people move around brandishing licences as a way of soliciting funds — kukorokoza nemalicence. We give them licences, they don’t implement them. They will lose them.”

Government recently licenced 12 independent power producers, but only six are operational resulting in the country experiencing incessant load-shedding and importing power from the region.

Mavhaire said Zanu PF won the July 31 elections because it promised people to deliver on a lot of things, among them electricity. He said people who sought to sabotage Zanu PF’s election manifesto would face the music.

The ministry, Mavhaire said, would, however, try to establish why some companies were not producing power after getting licences with the understanding that power generation required time in terms of setting up the power production plant.

Mavhaire said load-shedding would continue for some time, while the country improved its power-generating capacity.

Zimbabwe, which currently has a power deficient of over 500 megawatts (MW), according to Mavhaire, would eventually export power to other countries in the region. He implored the energy sector to embrace Zanu PF’s indigenisation programme.

“But I cannot allow the country to go in the dark because there are no indigenous players with the capacity to generate power,” Mavhaire said.

He urged the Zimbabwe Power Company (ZPC) to expeditiously commence the expansion of power generation that would see electricity output at Kariba increase by 300MW in three years.

“The time to talk is over. We want implementation,” he said. Expansion of Kariba Hydropower Station was set to resume next January.

ZPC projects manager Wellington Maphosa said the expansion process, to be complete in three years, would gobble in excess of $350 million.

“The 300MW will go a long way in reducing load-shedding at peak hours,” Maphosa said.

He said China Eximbank had promised to fund the project once a loan agreement was signed.

Sino-Hydro, a Chinese company, won the tender to expand the Kariba power station so that its output increases from 750MW to 1 050MW once the expansion is complete.

Government lethargy on power investment costly

Government lethargy on power investment costly

via Multimedia:Government lethargy on power investment costly by Victoria Mtomba forNewsDay October 10, 2013

THIRTY-THREE years after Zimbabwe attained independence, the country’s power generation capacity remains subdued and the consequences of government’s lethargy in investing in the omnipotent power supply have become too dire to contemplate.

http://www.zimbabwesituation.com/news/zimsit_government-lethargy-on-power-investment-costly/

Power outages to end — Minister

Power outages to end — Minister

via Power outages to end — Minister  by Fairness Moyana Sunday News 06 October 2013

THE Minister of Energy and Power Development, Cde Dzikamai Mavhaire, has assured the nation that the excessive load-shedding that is being experienced by electricity consumers is set to ease following the acquisition of spare parts that will be used in the restoration of the country’s two major power stations.

Hwange Power Station (HPS) is currently running on five units with Unit 2 undergoing repair and inspection, translating to power being generated at 445MW instead of 738MW at full throttle. The station, which was commissioned in 1984 and 1987 and is nearing its lifespan of between 25-30 years, has four 120MW Stage one units and two 220MW units.

In an interview with Sunday News on the sidelines of a familiarisation tour of Hwange Power Station last Thursday, Cde Mavhaire said the current situation was attributed to breakdowns at both Hwange and Kariba power stations which the power utility was working on.

The visit by the minister comes in the wake of excessive load-shedding that is being experienced in the country leading to operations in industry and other critical sectors being paralysed due to the prolonged power outages.

“The purpose of this visit is to familiarise ourselves with the operations of the station and appreciate the challenges faced by Zesa in providing electricity to the nation as well as put in place intervention measures. As you may be aware that there is a public outcry over the excessive load-shedding being undertaken by ZPC, however, I would like to assure the nation that the situation is being addressed. Load-shedding is set to ease and we will have a fair share of electricity soon,” said Cde Mavhaire.

The minister said breakdowns at HPS had become commonplace due to the aging equipment being used and since power generation was an expensive exercise, financial constraints in buying spare parts were hampering effective maintenance of the plant.

“As you are aware the plant is now old and in some cases major overhauls need to be carried out to ensure that the units work effectively. This of course requires financial commitment. As Government we are working on making funds available for the plant to undergo serious maintenance,” he said.

Cde Mavhaire said investors from China and India had shown interest in bankrolling power generation projects in the country with major expansion projects earmarked for Hwange and Kariba stations which would result in 600MW and 300MW respectively being added to the national grid.

Briefing the ministerial delegation on the challenges being faced by the utility in providing uninterrupted power supply to the national grid, HPS general manager, Mr Arnold Chivurayise said the current power generation was below installed capacity due to the old plant which resulted in an increase in the number of power trips caused by grid disturbances.

Mr Chivurayise said cash flow constraints in purchasing spares was a major hindrance as suppliers were demanding cash upfront before manufacturing the components required by the company.

“Honourable Minister, we are faced with a difficult situation when it comes to acquisition of spares for our aging plant as most of our suppliers demand cash upfront or half down before manufacturing the required spares. When they are done they hold on to the item until the rest of the money is paid and that has adversely affected the operations of the station,” he said.

Mr Chivurayise said ZPC was set to construct a mini-hydro power station at Gairezi which would produce 30MW while technical surveys were under way on the Batoka Gorge project, a joint venture between Zesco and ZPC which would see 1 600MW being produced.

PRESS STATEMENT ON THE STATE OF NATIONAL POWER SUPPLY BY THE MINISTER OF ENERGY AND POWER DEVELOPMENT, HONOURABLE D.C. MAVHAIRE (SENATOR)

 

 MINISTRY OF ENERGY AND POWER DEVELOPMENT

 

02 OCTOBER 2013

PRESS STATEMENT ON THE STATE OF NATIONAL POWER SUPPLY BY THE MINISTER OF ENERGY AND POWER DEVELOPMENT, HONOURABLE D.C. MAVHAIRE (SENATOR)

 

1.     INTRODUCTION

 

The country has been going through increased load shedding since the beginning of September 2013. This is coming after the country has experienced a relatively good power supply during witer. This has been achieved by

·        The restoration of all six generating units at Hwange as a result of the rehabilitation program that the Government has been funding since 2010.

·        The increased access to imports following clearing of power import arrears with Hydro Cahora Bassa (HCB) of Mozambique.

·        Demand side management efforts by ZETDC in which 1.1 million compact fluorescent lamps (CFLs or energy savers) were installed on households thereby saving about 63MW.

·        The support from the Southern African Power Pool to assist the country as it held the harmonized elections and the co-hosted UNWTO.

 

While all the six units at Hwange have since been restored; there are still some works that are needed to be undertaken to increase the output and reliability of the power plant. In addition, all power generation machines need periodic planned maintenance to ensure safe and sustainable operation. This maintenance is normally carried out after the winter peak period with the aim of finishing the maintenance before the following winter period.

 

·          Causes of Current Power Shortages

·             Planned Outages for Statutory and Rehabilitation Works

 

At the beginning of September 2013, Zimbabwe Power Company (ZPC) began to take out generating units to implement planned statutory maintenance at Hwange and Kariba power stations. ZPC will also carry out plant upgrade and rehabilitation works during these planned outages.

 

ZPC has scheduled to carry out the planned outages with durations varying from 3 weeks to 16 weeks on 8 units during the off peak season maintenance window. This means that some unit outages have to overlap.

 

·             Plant Breakdowns

The aged power infrastructure continues to hinder continuous power supply. The failure, in the early hours of this morning, of Warren 330kV bulk power supply station resulted in

·        Loss of supply to half of Harare affecting part of the Central Business District, Western and Northern suburbs.

·        Tripping of Harare power station that was generating 45MW.

·        This was a once off incident and supplies have since been restored.

 

·             Limited Imports in Region

 

2.     CURRENT POWER SUPPLY STATUS

 

SOURCE

CAPACITY (MW)

REMARK

Hwange Power Station

470

4 units in service

Kariba Power Station

500

4 units in service

Small Thermal Power Stations

47

Bulawayo and Munyati

Total Internal Generation

1017

 

Imports

200

HCB only

Contractual Exports

-50

Reduced from 150MW

TOTAL

1167

 

Forecast Maximum Demand

1730

MD 2200MW during winter peak

Shortfall

(563)

 

 

 

3.     CHALLENGES IN THE POWER SECTOR

·        Inadequate Internal Generation Capacity; even when we dispatch all our assets the power will not be adequate.

·        We are working on rehabilitation and upgrading of our aged and obsolete network infrastructure. This will reduce the frequent breakdowns.

·        Limited import availability as the whole region is short of power.

·        Lack of Energy Efficiency culture and limited use of alternative energy in view of capacity shortfalls (Demand Side Management)

·        Theft and vandalism of power infrastructure;

 

4.     STRATEGIES TO ENHANCE ELECTRICITY SUPPLY

·             ZPC should complete its maintenance and rehabilitation programme as scheduled.

·             ZETDC will continue to engage regional utilities for additional imports and renew all PPAs timely.

·             Demand Side Management efforts are to continue, ZETDC is resuscitating the ripple control system in Harare and Bulawayo. This will see a saving of 42MW during peak periods in the first quarter of 2014.

·             ZEDTC will accelerate the installation of prepayment meters as these have assisted consumers in managing their energy consumption responsibly in addition to improving cash flow for the utilities.

·             In the face of the current shortages, priority for power supply will focus on the agricultural sector to support winter wheat crop and the tobacco crop.  This is in addition to the essential services that are exempted from load shedding i.e.;

Ø     Major referral hospitals,

Ø     Major water and sewer installations’

Ø     National security establishments,

Ø     Major airports and broadcasting stations,

Ø     Major Central business districts

Ø     Major border posts.

 

5.     LONG TERM POWER SUPPLY STRATEGIES

 

The long term solution to power supply in Zimbabwe lies in the expansion of our generation capacity. The Electricity Act has liberalized the power sector, allowing participation of Independent Power Producers (IPPs) in power generation. The Zimbabwe Energy Regulatory Authority has duly licensed a significant number of IPP projects. The Government shall give these projects all the necessary support.

 

Hwange (600MW) and Kariba (300MW) Extension

Meanwhile, ZPC is implementing generation expansion projects at Hwange and Kariba power stations. The two projects will see an increase in generation capacity by 900MW in the next four years.

 

The application for financing of the Kariba power station extension project, by China Exim Bank, is at the final stages of approval and financial closure will be achieved during this quarter.

The Contract for the expansion of Hwange power station was awarded to China Machinery Engineering Corporation (CMEC) of China. ZPC and CMEC are currently holding negotiations.

                                                  

Batoka Hydro (1600MW)

This project is being implemented by the Zambian and Zimbabwean Governments through the Zambezi River Authority (ZRA). ZRA is in the process of appointing Consultants for updating the feasibility studies for the project.

 

Other Projects

·          Gairezi Small Hydro (30MW) and other mini hydros.

·          Chisumbanje expansion to 18MW

·          Solar Power Projects (100MW)

·          China Sunlight Africa Thermal power plant (600MW), IPP.

·          Regional Power Project

 

6.     APPEAL TO CUSTOMERS TO CONSERVE ELECTRICITY

 

Given the current situation I call upon all electricity consumers to play their part in reducing electricity demand by using the limited power available conservatively.

·             All non-essential load should be switched off at all times

·             Non-essential lights and office equipment should be switched off overnight.

·             Organisations that can shift their activities to off peak periods should do so.

·             Use gas for cooking.

·             Use solar for water heating.

·             Customers should honour their bills in order to ensure security of supply.

 

7.     CONCLUSION

·          We expect the current situation to continue to improve. The breakdowns at Hwange and the transmission have been resolved. The load is expected to improve steadily and reach acceptable levels by the end of October 2013.

 

·          The current power supply shortage is not as a result of failure to pay for power imports. ZETDC is in good standing with the utilities from which the country imports power.

·          The debt relief that ZESA offered to customers was done after careful consideration in which the financial viability of the power sector was ensured. It was important to give relief to important customer categories, domestic customers and agriculture sector without compromising the viability of the power utilities. This is why the debt relief was only partial.

D. C. MAVHAIRE (SENATOR)

MINISTER OF ENERGY AND POWER DEVELOPMENT

 

 



Power cuts hit industry

Power cuts hit industry | The Herald

via Power cuts hit industry | The Herald October 2, 2013

ZIMBABWE looks set for its worst power situation this year triggered by ongoing annual maintenance of main power stations that have knocked out more than a half of the country’s generation capacity.

The nationwide power cuts are already having severe negative implications on the already squeezed industry and it is now being feared the situation could threaten the survival of struggling firms.

Residents countrywide have not been spared either, with many people enduring full day power cuts and this has forced households, industry and commerce to invest in expensive alternative sources such as generators.

Zesa Holdings generation unit, Zimbabwe Power Company said the maintenance at Kariba and Hwange power stations would only be completed in February 2014. Kariba and Hwange have dependable capacity of 750 megawatts and 700MW respectively, but are currently averaging 500MW and 380 MW.

Imports, mainly from Mozambique are ranging between 50MW and 300MW, depending on the source peak periods. Zimbabwe experienced over 17 percent deficit on its requirements in the eight months to August 2013.

And the current output falls far short of the country’s electricity requirement of 2 200MW at peak periods of demand usually experienced in the morning and evening, which is balanced through load shedding.

Zimbabwe National Chamber of Commerce president Mr Hlanganiso Matangaidze expressed concern over the increase in loadshedding over the past few weeks saying it was detrimental to industry.

“At the moment only a few companies are operational as most companies closed shop due to operational challenges while capacity utilisation is very low,” he said.

“Increased load shedding is therefore a threat to the survival of those companies and we believe the power utility should at least spare industry from increased load shedding.”

He added that increased load shedding was “suicidal” towards increasing industry’s capacity utilisation.

Confederation of Zimbabwe Industries president Mr Charles Msipa bemoaned the increase in load shedding saying it has forced companies to run on generators for long hours pushing up operational costs.

“It is very bad we are running generators the whole day and this obviously comes with exorbitant operational costs,” he said. CZI is the country’s largest industry lobby group.

Yesterday, the power utility reminded consumers that the current increase in loadshedding, which is outside the published schedule as previously advertised, was due to statutory annual maintenance at Hwange and Kariba Power Stations and some unplanned outages at Hwange.

The crippling power cuts deficit yesterday interrupted the flow of business of some service providers such as the Zimbabwe Revenue Authority and Zimpost.

However, Government is vigorously working on expanding Hwange Thermal Power Station units 7 and 8 and Kariba South Hydro Power Station for an additional 900MW, which is estimated to take up to 42 months. China Machinery and Energy Corporation and Sino Hydro will undertake the expansions.

Power shortages hold up turn-around, say experts

Power shortages hold up turn-around, say experts

via Power shortages hold up turn-around, say experts | The Zimbabwean by Farai Mabeza 02.10.13

Zimbabwe experienced an energy shortfall of almost 18 per cent between January and August this year, making an economic turn-around difficult to forecast, say experts.

“Without changes in the energy sector all the economic reforms that are being touted won’t take off,” Innocent Makwiramiti, an economist, told The Zimbabwean in an interview.

The view was shared by another economist, Eric Bloch, who called for private sector involvement in the energy sector to draw Zimbabwe out of uncertainty.

Bloch said the power sector was in critical condition, far beyond the state sector’s ability to handle alone.

“We have to prioritise (the capacity needs of the Zimbabwe Electricity Supply Authority) ZESA Holdings. It does not have the necessary capital resources to upgrade and invest in power projects. It has also lost most of its skilled employees,” he said.

“Private sector involvement in alternative power generation is imperative. A country like Zimbabwe should be heavily involved in solar power generation projects because of the abundant sunshine,” he said.

An analysis of the country’s power supply base, published in a report from the Zimbabwe Power Company (ZPC), shows that Kariba remains the main source with 37.28 per cent, followed by Hwange with 28.67 per cent, Munyati at 1.44 per cent, Bulawayo 1.24 per cent, and Harare a mere 0.46 per cent. That left the remaining imported energy at 13.22 per cent of total supplies.

Energy, a key ingredient for business development, is still scarce and Zimbabwe is nowhere near solving its power deficit because of a weak economy and aging plant and machinery.

Proposed power generating projects are at different stages of implementation as the country gropes in the dark for a lasting solution. With 11 projects still on the drawing board, only the Kariba South Extension plan has inched forward and promises 300 megawatts for the national grid. The new Kariba plan, however, requires $400 million to take off.

According to ZPC, the design review of the project is in progress alongside work on the finances. Technical and funding negotiations for the construction of the additional two 300-megawatt generators at Hwange are also said to be underway.

Another long-standing initiative is the Batoka Gorge project for four 200 megawatt power generators in the next six years. This massive scheme along the Zambezi River is projected to cost $2.2bn.

Makwiramiti said the low capacity of the power generation sector made nonsense the possibility of a quick economic recovery. “There is need for investment in projects such as the Batoka Gorge. We should also use energy from the sun,” he said. “There are a lot of projects that can be implemented by the private sector in the form of public private partnerships.”

Work on Batoka Gorge has yet to pass the bidding stages for a comprehensive environmental and social impact assessment and an engineering feasibility study.

Other proposed projects are the Gairezi hydropower station in Nyanga; an extension of the generation life cycle at Hwange; the upgrading of Deka pipeline; repowering schemes at Harare, Munyati and Bulawayo power Stations, and a coal-bed methane project in Matabeleland North.

Zimbabwe recently tendered a $400m solar power project for Gwanda, Plumtree, Munyati and Zvishavane areas as a short-term measure.

Batoka power project on course

Batoka power project on course | The Herald

via Batoka power project on course | The Herald by Sydney Kawadza October 1, 2013

THE construction of the US$3 billion Batoka Gorge Hydroelectricity Scheme is set to start by the end of next year after the completion of the US$2,5 million access road linking Victoria Falls and the Batoka Gorge through Chisuma area.

However, construction of the access road on the Zambian side is still to be competed with only less than 2km left.

The recent completion of the access road to the gorge on the Zimbabwean side would facilitate feasibility studies and designs for the station.

Zimbabwe and Zambia are expected to get 1 600MW from the envisaged project. The scheme would see the construction of a 54-kilometre Batoka Dam upstream of Lake Kariba.

Addressing journalists during a media tour of the Batoka Gorges in Zimbabwe and Zambia recently, Zambezi River Authority spokesperson Ms Elizabeth Karonga said the authority had launched the tendering process for an environmental impact assessment of the project.

“The Zimbabwean and Zambian governments have agreed on the need to set aside their differences emanating from the dispute over payments on the Kariba Dam and we have had a commitment from both President Mugabe and President Sata on the need to expedite the project.”

She said the authority was not expecting challenges from environment and social impediments since the area earmarked for the project was not populated and has minimal animal movement from the site.

“We expect the project to commence at the end of 2014 and the project would take at least seven years to complete.”

ZRA hydrology technician Mr Samuel Mwale said the hydroelectricity project would add significant power to alleviate power shortages in Zimbabwe and Zambia.

“The dam completion would see the generation of  1 600MW, that is 800MW on the Zimbabwean side and similar amount on the Zambian side.

“This would see both countries receiving quite a significant amount of electricity to alleviate power shortages in both countries,” he said.

Mr Mwale said there would be minimum environment and social impact on the communities.

“The dam wall would be about 181 metres in the Batoka Gorges and all the water would be confined in the gorges and this would have minimum impact on the environment and societies,” he said.

ZRA is a corporate body jointly owned by Zimbabwe and Zambia through bilateral agreements to co-manage the shared stretch of the Zambezi River and it has been managing Lake Kariba and its attendant infrastructure to facilitate and support hydropower generation through the country’s power utility companies.

Zambia and Zimbabwe have agreed to expand hydropower infrastructure on the Zambezi River.

The process leading to project implementation is organised under five main areas, namely that preparatory works, tendering process, organising project implementation, approval and awarding of contracts and construction and supervision of physical works.

Rolling power outages plague Zimbabwe

Rolling power outages plague Zimbabwe

via Rolling power outages plague Zimbabwe | SW Radio Africa by Tichaona Sibanda on Tuesday, October 1, 2013

The ongoing spate of power outages in the country has created anger, frustration and much debate as to the nature of these energy cuts.

In the heat of this frustration and anger the ruling ZANU PF government has come in for much criticism for its inability to deliver power to the country.

Lionel Saungweme, our Bulawayo correspondent, told us that while the power utility company ZESA has the responsibility to generate electricity for commercial and residential use, they are not entirely to blame for the current crisis.

Saungweme told our weekly Speak out-Padare program that if anyone is to be blamed it is the government, for failing in their collective responsibility to plan effectively and strategize for electricity provision.

‘If ZANU PF can pay Nikuv $10 million to rig the elections, what stops them from investing the same amount of cash to repair and perform maintenance on existing infrastructure,’ he said.

The problem is however not new. The country’s power supply has been stagnant since independence. In the last three decades there was no investment in electricity supply, despite surging demand.

Saungweme said the recent unprecedented outages have paralysed social and economic activities in most parts of the country.

‘Recently I travelled from Harare to Bulawayo and the towns and cities were in darkness due to total power cuts, a situation which has affected the livelihood of the residents, who now rely on generators for homes and businesses.

‘The constant power cuts have brought untold hardships to many people, especially in urban areas. Currently, lack of electricity supply is one major crisis facing the country and it seems the government is clueless to rectify the crisis,’ Saungweme added.

Zim faces power deficit | The Herald

Zim faces power deficit | The Herald

via Zim faces power deficit | The Herald by Golden Sibanda September 30, 2013

ZIMBABWE experienced a 17,69 percent deficit on its total domestic and commercial electricity requirements during the eight months to August 2013, official industry data has shown.The magnitude implies that industry and households have had to contend with the cost and inconvenience arising from rolling power cuts that the national power utility Zesa Holdings is using to balance available power supplies.

In an effort to balance demand and power supply Zesa Holdings has resorted to alternated load shedding throughout the country during peak demand period usually in the morning and in the evening.

Zimbabwe Power Company assistant corporate executive Mr Douglas Chingoka told the Zimbabwe Mining and Infrastructure Indaba last week that reliable generation capacity stands at a mere 1 320 megawatts. ZPC is a subsidiary of Zesa Holdings.

While the annual mining indaba initially focused on mining issues it is now incorporating infrastructure issues, which include power because Zimbabwe and the continent face huge challenges in this respect.

Local generation capacity falls far short of the demand of 2 200MW, which also stands way above installed capacity of just above 1 900MW as new power generation projects take time to complete.

Zimbabwe imported 13,22 percent of the total electricity consumed in the country between January and August this year while 37,2 percent was generated in Kariba, 28,6 percent at Hwange Thermal Power Station, 1,44 percent at Munyati, 1,24 percent in Bulawayo and 0,46 percent in Harare.

“Zimbabwe is plagued by a shortage of power. Reliable capacity is of the order of 1 320 megawatts against a demand of about 2 200 megawatts. There is need for investments to be made in order to increase the amount of reliable capacity,” Mr Chingoka told the indaba.

The grim scenario points to the urgent need to start working on implementation of all power projects on the cards without delay as current shortages are constraining economic recovery.

Companies in the mining and other sectors of the economy have had to either invest in expensive diesel power generators or pay in advanced for ring-fenced import direct power supplies.  While this has been heavy on the pocket, those with weak balance sheets to make such high cost alternative arrangements have had to contend with the inconveniences of load shedding.

For its part ZPC is working on the extensions of Hwange Thermal Power Station Units 6 and 7 for an additional 600MW and Kariba South hydropower station for another 300MW.

Sino Hydro will expand Kariba South at an estimated cost of US$400 million and the project is now at design review stage being done parallel to financial closure for the project.

China Machinery and Energy Corporation won the tender to expand the Hwange Units 6 and 7 and the parties to the deal are currently engaged in technical and funding negotiations.

The two projects remain the biggest most likely to get underway by early next year and it is anticipated that expansion of Kariba will take 40 months while Hwange will take 42 months.

There are several other projects being pursued by independent power producers across the country, but most of the projects have taken far too long to complete amid acute funding constraints.

While Zimbabwe faces suffocating power deficits, it has vast energy sources at its disposal to raise the generation capacity, which only needs to be tapped, but capital is the biggest problem.

The increase in capacity has to be done at an affordable price and these include coal (thermal power stations), coal bed methane (thermal power stations), hydro-power and solar energy.

Chinese firm scales up Zim power project

Chinese firm scales up Zim power project

HARARE - China Africa Sunlight Energy Limited (CASE) says it is now considering building a 600 megawatt (MW) thermal power plant in the northern part of Zimbabwe from the initially planned 120 MW.

The Asian group, intending to invest approximately $2,1 billion in the southern African country’s energy sector, has since engaged the Zimbabwe Energy Regulatory Authority (Zera) on their plans to build a bigger plant after concluding exploration activities in Gwayi.

“CASE is seeking to amend the licence to an increased generating capacity of 2x300MW,” said the company in a statement yesterday.

The application for amendment of the licence by CASE is done and is terms of sub-section (1) (b) of section 49 of the Electricity Act (Chapter 13: 19) of 2002.

CASE — a joint venture between Old Stone Investments of Zimbabwe and Shandong Taishan Sunlight — recently indicated plans to invest as much as $2,1 billion to develop coal mines and build a 2 100 MW coal fired power station in Zimbabwe.

The energy firm said it will start with capacity to produce 300 MW by mid-2015 and raise this to 600 MW by the end of that year.

CASE has spent $20 million on exploration, and was granted rights to look for coal and coal-bed methane in the area in October 2012.

The southern African nation has a huge power deficit, and imports 35 percent of its national requirements from its neighbours.

Due to lack of funds, and a general power deficit in southern Africa, the country experiences constraints with imported power, resulting in electricity rationing to consumers. Zimbabwe domestically generates around 1 200 MW, against a 2 100 MW demand.

The country has coal resources of 10 billion to 15 billion tonnes, according to government estimates.

CASE, which recently received a certificate to carry out a full Environmental Impact Assessment for the construction of a power generation plant, plans to sell some of its electricity to Zesa, the State-owned power-generation company.

Its coal exploration area, in Gwayi in the western Matabeleland region, has four billion tonnes of resources and CASE is conducting studies to measure how much gas is available, with the results to be known in three months.

“If they discover gas, the way we think they are going to, we want to export the gas overseas to India in partnership with Discovery Investments,” said Charles Mugari,  CASE’s general manager.

Mugari noted that depending on the outcome of the gas study, the company wants to start a programme piloting methane gas for domestic gas in Hwange, also in Matabeleland, and extend this to Bulawayo, the second-biggest city, if successful.

“CASE is looking at the possibility of pumping gas to the port city of Beira in neighbouring Mozambique, using an idle pipeline that the National Oil Company of Zimbabwe once used to bring fuel into the country,” he said.

ZESA bows down to political pressure on debt relief

ZESA bows down to political pressure on debt relief

via ZESA bows down to political pressure on debt relief | SW Radio Africa by Nomalanga Moyo 11 September 2013

The Zimbabwe Electricity Supply Authority has finally bowed down to political pressure and cancelled utility debts amounting to $170 million. The power utility company is owed in excess of $600 million by ratepayers.

But according to a statement issued Tuesday, ZESA will be writing off $80 million from the total debt owed by the farming community.

For domestic users $90 million will be taken off their combined bill, which translates to $160 per household, according to the figures given by ZESA.

ZESA said: “The debt relief to customers was devised after extensive consultations with farmers’ representatives and other stakeholders as a way of contributing to the general economic recovery and success of the agrarian reform in anticipation of the new planting season.”

The energy supplier said the adjustments will be reflected on customers’ October bills, with prepaid meter customers getting electricity units equivalent to $160.

However, ratepayers are not convinced this move is for their benefit.

Combined Harare Residents association chairperson Simbarashe Moyo said it was clear that this was a political move meant to benefit politicians.

“We are surprised by what the government is doing. First it was water bills, now electricity. This is happening at a time when residents have been contributing significantly to the reduction of their debts to ZESA through a plan that is already in place.

“For us the benefit to residents is nothing compared to what the politicians, farmers and businesses stand to gain. These are the people who since 2000 have been consuming electricity without paying and owe ZESA huge amounts,” Moyo said.

Moyo further criticised politicians for sending out a wrong message through the debt relief schemes: “What this essentially tells ratepayers is that if you don’t pay and five years lapse you can have your bill written off by politicians.”

Moyo said residents were also concerned that as a result of the debt cancellation measure, ZESA may fail to service its own debt to energy suppliers such as Eskom of South Africa.

“We will be hoping that the government has also put in place plans to take care of what ZESA owes its own suppliers as well as banks – otherwise this is a recipe for disaster which will see 24-hour blackouts,” he added.

On Wednesday morning, Harare’s central business district was without electricity.

Last month outgoing Energy Minister Elton Mangoma warned that ZESA would be thrown into financial difficulties if the forced debt relief, driven by ZANU PF deputy leader Joice Mujuru, went ahead.

Mangoma said ZESA was running a breakeven tariff regime, and unless ZESA gets paid for services rendered, it will collapse.

Even before ZESA announced the debt relief, reports suggest that it was already experiencing cash-flow problems as ratepayers withheld payments in anticipation of the government directive.

SW Radio Africa correspondent Simon Muchemwa said despite ZANU PF spinning the debt relief as a philanthropic move aimed at the majority of struggling Zimbabweans, it was party loyalists and senior officials who were the winners.

“They are the real beneficiaries as they own most of these farms and businesses,” Muchemwa said.

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