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ZESA

‘No loadshedding this year’

‘No loadshedding this year’
Minister Samuel Undenge

Minister Samuel Undenge

Harare Bureau
ZIMBABWEANS will continue to enjoy uninterrupted electricity supply as government’s efforts to ensure constant power supply start paying dividends, Energy and Power Development Minister, Samuel Undenge, said yesterday.

The country last experienced load shedding in December last year.

Minister Undenge said the government would augment electricity from diesel powered generators to be installed at Dema Substation in preparation for high power demand from domestic consumers and wheat farmers in winter.

He said the Mutare emergency plant also running on diesel or gas, would add 120MW to the national grid and the tender was won by Helcraw Electrical (Pvt)Ltd.

Speaking at the Joint Command and Staff Course number 29 at Staff College in Harare yesterday, Minister Undenge said 2016 was a “transitional year” and there would be no load shedding.

“Although power generation at Kariba has been reduced to an average of 285 megawatts, you might have noticed that since the beginning of the year, there has not been any load shedding.

“If you’ve experienced any power cuts during this period, this was due to some faults on the system. This might appear as fiction to you as you had become accustomed to long hours of load shedding. I want to assure you that we’re working tirelessly to maintain this situation, (and) 2016 is likely to be a transitional year of no load shedding”.

He said it took some time and a lot of effort for government to deal with power outages.

Minister Undenge said government increased power imports from South Africa and Mozambique and ensured high level power generation at the four thermal power stations including Hwange to supplement limited generation capacity at Kariba Hydro Power Station.

He said some large power users embarked on energy efficiency improvements thereby releasing 25MW to other consumers.

Sable Chemicals released 40MW since they no longer use the old energy intensive technology of electrolysis in the production of ammonium nitrate.

Minister Undenge said the successful implementation of Zim-Asset needed all key economic enablers such as power to be in place as enshrined in the 10-point economic plan enunciated by President Robert Mugabe recently.

For quick economic growth, there is a need for infrastructural development, particularly in the Energy, Water, Transport and ICT sectors.

“With reference to Zim-Asset, you will agree with me that energy is the main enabler for the attainment of the set goals. We are therefore making every effort to increase its availability. The capacity demand forecast for us to achieve Zim-Asset targets is about 3,000MW,” said Minister Undenge. He said in order to achieve the above capacity, government identified short-and long-term solutions that were now being vigorously pursued.

These are: the emergency diesel generators and the repowering of the Bulawayo thermal station where the government has already secured $87 million from the government of India which will add 60MW to the grid.

This project will be operating full throttle in the next 24 months. Other measures are: repowering of the Harare power plant at a cost of $70,2 million whose tender was awarded to an Indian firm and financial modalities will be concluded soon. The project is expected to take 24 months to complete and will add 90MW to the the national grid.

The other project is the Munyati power plant which is expected to add 70MW to the grid and construction will also last 24 months.

Minister Undenge said the medium term main projects include the extension of the two existing power plants at Kariba and Hwange and the installation of up to 300MW solar plants.

Kariba Hydro Power Station is already being extended with the installation of an additional two units, which will provide 150 MW each and are at 40 percent completion stage with the first and second units expected to be complete by the end of 2017 and 2018 respectively.

Minister Undenge said Government was also involved in a number of power projects like the 2400MW from the Batoka hydropower plant, Gwanda (100MW) and the Gairezi project that would add 30MW.

He said a number of Private Sector Independent Producers (IPPS) have been licenced, the major ones being the 600MW China Africa Sunlight Energy plant at Gwayi, the 600MW southern energy thermal station at Hwange, the 600MW Lusulu thermal power station in Binga and the 2400MW Sengwa thermal power station at Gokwe.

Batoka costs double to US$4,5 billion

Batoka costs double to US$4,5 billion

Gorge_Falls

Batoka power station’s turbines were expected to start turning in 2001, as the neighbours took steps to provide enough electricity to their countries.

COSTS of constructing the 2 400 megawatt (MW) Batoka hydroelectric power station have spiralled to about US$5 billion, from the US$2,5 billion budget worked out when the project was conceived in 1993, a Zambezi River Authority (ZRA) official said last week.
ZRA is a joint venture company controlled by Zimbabwe and Zambia, which has the mandate to manage the Zambezi River basin and Kariba Dam.
Batoka power station’s turbines were expected to start turning in 2001, as the neighbours took steps to provide enough electricity to their countries.
Poor funding has, however, delayed the project 23 years on.
In the meantime, costs have been advancing southwards.
ZRA chief executive officer, Munyaradzi Munodawafa told the Financial Gazette’s Companies & Markets (C&M) in Kariba last week that recent studies have indicated that Harare and Lusaka could spend at least US$4,5 billion to construct the power station.
“From the feasibility studies we are doing, we are now talking of about US$4,5 billion, and the appetite (to fund the project) is there,” Munodawafa told C&M.
“This means the costs for setting up the Batoka hydro power project have almost doubled from about US$2,5 billion at conception 23 years ago,” he said.
This will be a toll order for the two countries, whose populations have grown and are facing several challenges that include the prolonged slide in global commodities prices such as copper and platinum.
In addition, Zimbabwe and Zambia will have to commit substantial resources towards the importation of grain in order to feed millions of people facing food shortages due to drought.
Batoka will be the second major power project shared by Zimbabwe and Zambia on the Zambezi River.
The two countries already share the Kariba Hydroelectric power station, whose capacity to meet this electricity needs has been undermined by declining water levels at Lake Kariba.
Prolonged droughts in the basin are threatening the power plant, which has scaled down generation on the Zimbabwean side to 285MW.
Kariba has an installed capacity of 750MW.
Construction of Batoka would therefore hinge on whether water levels in the Zambezi recover to sustain at least three big power stations on its course.
Initially, Zimbabwe and Zambia intended to construct Batoka on a Build, Operate and Transfer (BOT) basis.
But Munodawafa said they had switched to a public-private partnership model, with ZRA expected to source funding for the project.
“A decision has been made in terms of the model. It is not (going to be) BOT anymore. It is going to be the PPP model. ZRA is going to source funding for the dam, but when you talk of ZRA you are talking of two governments,” said Munodawafa.
He said the project was now awaiting completion of an update of feasibility studies and an Environmental Social Impact Assessment (ESIA) that started in 2014, funded by the World Bank.
The feasibility study is expected to be completed in July at a cost of US$3,6 million.
A South African company, Environmental Resources is undertaking the ESIA at a cost of US$1,3 million.
The studies would recommend mitigation measures for identified negative environmental and social impacts in line with the Environmental Act, which stipulates that such studies should be re-done if three years lapse before a project commences.
Munodawafa said the next step for ZRA would be to consider bids for companies that have submitted expressions of interest to build the power station.
“The updating of the feasibility studies is progressing very well. We are now at the concluding stages. We are finishing these (studies) because they are two pertinent (processes). By the end of July we should have them (ready),” he said.
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ZESA, transformers and passing burden to customers

ZESA, transformers and passing burden to customers

Takura Zhangazha Correspondent
The Zimbabwe Electricity Supply Authority (ZESA) is a behemoth of a state-owned and commercialised enterprise. Its remit, which is generating and supplying electricity to the country’s corporate and individual citizens is an invaluable public service that should always connote urgency, efficiency and a people centred approach to its statutory functions. When it was commercialised and split into at four separate but linked entities, namely, the Zimbabwe Electricity and Transmission Distribution Company (ZETDC), the Zimbabwe Power Company (ZPC), Powertel and ZESA Enterprises, the assumption was it would become much more efficient and possibly profitable.

In the public view, there is new found surprise at the fact that electricity supplies have generally gone uninterrupted over the last three or so months.

This, however, is not testimony to efficiency. It is more the benevolence, profit motive and surplus electricity supply of the South African power distributor, Eskom. It is also a phase which will inevitably see the cost of electricity rise significantly given the announced US$6,5 million a month that ZESA is currently paying its South African counterpart.

This does not change the fact that our electricity generation infrastructure is not only still based on colonial era infrastructure but is also continually incapable of meeting the national demand for power.

What is, however, more astounding is the fact that apart from problems of supplies, there is the more direct one of maintenance of electricity infrastructure. Many an urban resident will always have one particular story to tell about ZESA and the issue of damaged sub-station transformers.

It begins with someone stealing transformer oil from a local sub-station. Where the local neighbourhood is lucky, the transformer may become damaged but still be somewhat repairable. The worst luck is when the transformer is irreparably damaged and requires replacement.

What follows if the transformer is irreparable is one of the most traumatising experiences of an inefficient public enterprise that anyone could wish for. First the fault centre casually responds with the usual promise to send technicians who may arrive more than 48 hours after the fault report.

Second, when confirmation of the transformer being irreparable is made, comes the explanation from ZESA that the community should act to secure the substation. This includes the fortifying of the sub stations doors with steel rods, all at the consumers’ expense and no contribution from ZESA. The latter’s personnel return to inspect and approve the fortification but without a replacement transformer.

The explanation given is that there is a waiting list for transformers that dates back at least two months and so the given neighbourhood will have to wait it out until it becomes its turn. This can take up to a month without electricity supplies .

In panic at the prolonged lack of electricity supplies , residents try to call relatives or friends who work for the electricity utility company in futile attempts to resolve the crisis. Eventually they give up after prolonged social media networking and threats to go and demonstrate at the local ZESA office or even the headquarters.

What all of this points to is a parastatal that is functioning with an arrogant inefficiency. Never mind the fact that electricity is to the greater extent pre-paid and borderline privatised. It is as though the personnel who work for ZESA have been trained to have a habit of withstanding public clamour for a fault to be fixed.

In the process they pass on responsibility to the organisation’s higher offices that in turn are not keen on either fully explaining reasons why there are no transformers in stock let alone where all the tariff revenue is going to.

It is an unfortunate organisational culture that is fertile ground for favouritism and inevitably, corruption. Public accountability and transparency are then considered as the aversion as opposed to the norm.

For neighbourhoods affected by the loss of a transformer, while initially trying to find quick solutions to the problem, they eventually give up on expecting the best possible public service. And it becomes a waiting game while using other more expensive energy alternatives.

In the process ZESA becomes part of the problem as opposed to being the solution. And until such a time we change the management approach of this parastatal and others, we will always be the worse off despite paying through our noses for as basic a service as electricity.

Takura Zhangazha writes here in his personal capacity (takura-zhangazha.blogspot.com)

Kariba South expansion now 40pc complete

Kariba South expansion now 40pc complete

Kariba-South-hydropower-plantGolden Sibanda Senior Business Reporter
Construction work on the 300 megawatt capacity expansion of Kariba South Power Station is now 41 percent complete, Zimbabwe Power Company has said.

ZPC said the project is progressing well with adit, a horizontal passage into a mine for purposes of access or drainage, excavations completed while the manufacturing of electro-mechanical equipment is already underway in China.

“Some of the equipment has already been delivered to Kariba for example, the crane rail was delivered in January and is being installed in the turbine house,” ZPC said.

Further, Zesa Holdings generation unit, said the draft tube material has also been delivered to site and is being assembled at the project site, which is Kariba South Hydro Power Station.

Chinese firm Sino Hydro won the Engineering Procurement and Construction contract for the extension of Kariba South, which is expected to come on line in early 2017 while the whole plant should be on the national grid end of 2018.

The Chinese firm also landed the EPC contract for the 600MW expansion of Hwange, which is producing an average of 500MW from installed capacity of 920MW as it is old, with ZPC now working on the conditions precedent before the first draw down on the loan from China Eximbank.

Kariba South, will resume production of more and the cheapest electricity in Zimbabwe once water levels at Kariba Dam rise.

It is expected that with onset of heavy rains upstream of Zambezi, lake levels will rise, but only moderately by about 1,3 metres, to add to the 1,65 metre lake level, the minimum draw down level when generation of power has to be stopped.

Kariba South and Kariba North power stations may not generate power if water levels fall below draw down level, which has head room of 1,65m and can last about 156 days at average generation levels of 285MW by both utilities.

While the lake water may still cover vast swathes of land usable for other activities such as fishery and adventure, it cannot be used for power generation when the lake water falls below draw down level of 474 metres above sea level.

'Lake Kariba not drying up'.

'Lake Kariba not drying up'.

HARARE - Although water levels at Lake Kariba are historically at their lowest, it is false and misleading for anyone to suggest that it is drying, Kariba District Administrator Amigo Mhlanga told the Daily News on Sunday this week.

In a wide ranging interview with our Assistant Editor Maxwell Sibanda (MS) carried in Kariba during the launch of the Zimbabwe Red Cross risk reduction scheme, Mhlanga (AM) said it was unfair for people who have never been to Kariba in recent times to make such claims which are not only lies but alarmist. He also refuted claims that the Chinese let out a lot of water during one of their operations at Kariba Dam.

Mhlanga admitted however that the water levels were historically low and that for the first time there was load shedding in Kariba.

Below are extracts from the interview:

MS: Is Lake Kariba drying up?

AM: No, not at all and we who live here and whose life revolve around the Zambezi River are surprised that people can stoop that low and lie that Lake Kariba and the dam are running dry.

MS: So there is no need for Zimbabweans to panic?

AM: People should stop lying; they should stop talking about what they haven’t seen. Yes, the water levels are low but that does not mean people will “die”. This river stretches up to Binga and people downstream have never raised concern that their source is running dry.

MS: What percentages are we talking about?

AM: It has decreased by 12 percent which is quite significant and such a drastic decline last happened in 1992 although off-hand I am not sure about the percentage drop then.

MS: Was there any improvement to the water levels since you conducted traditional rituals as had been called for by local chiefs and elders?

AM: Yes, to our surprise after the rituals we recorded a five percent increase in the water levels. We just did as the elders of this land instructed and this resulted in that increase — there were some significant changes.

As I speak, the fishermen are reporting an increase in their catch — kapenta and bream — because of that slight water rise.

MS: How is the Lake’s low water levels affecting people living in Kariba?

AM: The lake is the source of livelihood for all the people living in Kariba, be it drinking water, leisure boating and electricity for the whole nation. The fishermen have also been affected as they can no longer access other places using their boats. As a result there has been concentration of fishermen at areas with enough water. There is congestion and panic along the river banks as well.

MS: When do you expect the dam to fill up again to normal levels?

AM: The dam usually fills up in May, June up to July as the water comes from Angola.

MS: Will we get to May with the water left in the dam?

AM: I am not an expert, but yes we can go through to May because estimates were actually saying we can even go until October. But we will still have to continue with load shedding. We have to assess the situation and as we reach May, June, July we should be able to have a clearer picture.

MS: There are concerns that too much dam water could have been released and that the Chinese had a hand in all this — how true is this?

AM: We are also hearing from people that the Chinese had a hand but that is not true because no one ever released water from the dam. It wasn’t opened at all — I am an official of the Zambezi River Authority and we are updated on any operations at the dam and no such thing ever happened.

MS: How has been your working relationship with Zambians whom you share the dam with?

AM: Very cordial, we are like brothers because the dam is one source shared by two nations so you cannot afford to be arrogant.

MS: And there has been talk of repairs on the dam wall — have they commenced?

AM: Officially we have not been told of any such work having started. If there is something like that we have not been told yet.

MS: And how is the situation in terms of rains for agriculture?

AM: There has been some improvement for the past two weeks although the situation is not good at all. There isn’t much food in the fields because of the heat wave which hovered at around 40 (Degrees Celsius). Most of the crops wilted at germination stage and are a right-off.

MS: What are some of the challenges that you face as a district?

AM: Hunger is always upon us, the temperatures are too high, hence food supply is a necessity. The government is trying to alleviate the situation as they provide 85 tonnes of food for each ward each month.

MS: Are the roads accessible?

AM: That is our biggest challenge because the roads are very bad that we have resorted to using boats to transport food. Through other stakeholders like Pandenga Holdings —we have managed to ferry food by boats up to Chalala and from there we can easily distribute the food. A boat usually carries between 50 and 60 tonnes of food.

Zim to import electricity from Zambia

Zim to import electricity from Zambia

February 22, 2016 in Business

POWER utility Zesa Holdings (Zesa) is set to import electricity from Zambian company, Nusenfwa from August to address power shortages in the country.

BY TARISAI MANDIZHA

Speaking during a tour of the Kariba Hydropower Station on Friday, Zesa spokesperson, Fullard Gwasira said Nusenfwa was a private public partnership arrangement and Zimbabwe was targeting to import up to 100MW from Zambia this year.

“Zimbabwe will import an initial 56MW from Nusenfwa from Zambia as of August 1, but will add 20MW until it ramps up to 100MW, as some of the mitigation measures to ensure availability of electricity in the country,” he said.

Zesa spokesperson Fullard Gwasira

Gwasira said presently the government was spending $6,5 million monthly on power imports from South Africa’s power utility Eskom.

Zimbabwe is importing 300MW of electricity from South Africa’s power utility Eskom and another 40MW from Mozambique. The country generates about 1 300MW against a demand of 2 200MW.

Presently the Kariba power station is generating 285MW instead of 750MW due to low water levels. Zesa also generates power at Hwange, Kariba and three smaller thermal stations in Harare, Munyati and Bulawayo

Gwasira, however, said the power imports were meant to augment electricity production in the country and some of the measures to increase power generation include the Kariba South Power Station project, which is now 40% complete, Hwange Power Station, Dema emergency diesel power plant and the solar geysers, electricity tariff increase among others.

“Kariba South Power Station is 40% complete, we are very happy with the progress and we are sure we will meet the 2018 target for completion in line with Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset).

“Plans are at an advanced stage to introduce solar geysers, so they are a wide variety of measures for both the supply and the domestic side,” he said.

Zimbabwe has various projects that could generate an additional 3 540MW by 2018.

According to reports, these Zimbabwe Power Company projects are Gairezi Hydro Power Project to produce 30MW, solar projects to produce 300MW, Mutare peaking power plant to produce 120MW, coal-bed methane gas to produce 300MW, Kariba South 7 and 8 extension to produce 300MW, Hwange 7 and 8 Expansion to produce 600MW and together with other works on existing plants which will total 1 890MW.

 

 

ZPC to maintain Kariba power generation at 285MW

ZPC to maintain Kariba power generation at 285MW

Golden Sibanda Senior Business Reporter
The Zimbabwe Power Company can sustain power generation at the revised permissible level of 285 megawatts after Zambezi River Authority reduced water allocation for the utility’s Kariba Power Station. Zesa Holdings generation unit downgraded output from the previous production level of 475 megawatts to the current average of 285MW after ZRA reduced allocation due to falling water levels in lake Kariba.

Two power utilities generate power on the Zambezi River, ZPC on southern bank and ZESCO of Zambia on the Northern bank and at the current generation levels, the lake level falls 0,5 cm to 1 cm per day.

ZRA regulates activities on the Zambezi River, which feeds into Lake Kariba, from which the power utilities have their hydro power stations, which are also their biggest and most reliable power plants.

ZRA chief executive Mr Munyaradzi Munodawafa said while it was not expected that there would be much improvement in the lake water level this year, current generation level can be maintained until the next rains.

“The situation is still not good; the situation we have is very bad. The current trend is slightly above what we experienced in 1995 where the lake levels went worse than what we currently have.

However, in 1995 there wasn’t much generation than what we are having that is why we were at least not worried.

“However graphs are going up in terms of the water flow upstream of the Zambezi River, like in Chavuma we have about 2000 cubic metres per second of water passing and flowing across into the Zambezi River from the Angolan side flowing into Zambia.

“That water has to pass through the Barotse plains. But the Barotse were very thirsty and all that water is being gabbed in the plains and when the plains are satisfied they will release the remainder.

It is expected that the Kariba Lake water levels will increase by at least 1,3 metres this year in addition to the 1,6 metres level, which is the remaining head between the lake level and minimum level at which generation on Kariba can be sustained, although the lake will still have vast amounts of water.

“We are doing 285 megawatts today because of low water levels in the dam,” Kenneth Maswera, general manager for Kariba Power Station.

“This level was last seen in 1992. We didn’t shut down the stations we only reduced our consumption. Water flows come in between March and May, but for now there are no significant inflows”

“We are using 0,51cm to 1 centimetre of water per day. In the worst scenario that we don’t get any inflow, this will give us an extra 165 days, but once the inflows come in, we would last for another year”

ZESA spokesman and stakeholder relations manager Fullard Gwasira said rather than waiting for water inflows to improve and lake water levels to rise to increase generation, interventions have been put in place to stabilise generation and import power.

“It’s a fact that we don’t have enough water, but we’ve put in place interventions to import 300 mega watts from Eskom. We are pre-paying $6,5 million to Eskom for the power imports” Mr Gwasira said

Mr Gwasira also said that negotiations were ongoing with Lusefwa of Zambia for additional imports of 56MW to commence in August as well as 40MW from EDM of Mozambique to augment the power that is being produced by local power plant.

He said revenue collection measures had been put in place, for supply side management, to make sure availability of financial resources to purchase the power. “In January, we collected $24 million from the prepaid platform and this to a large extent has made funding available”

“We are also negotiating to import 40 mega watts from EDM and from Aug, we will be getting an additional 56 mega watts from Lusefwa in Zambia” All these interventions and the current power supply situation can only be sustained given a tariff increase.

Zim’s power situation improves

Zim’s power situation improves

Business Reporters
ZIMBABWE’S power situation has improved significantly in the past four weeks owing to a number of initiatives put in place but Zesa Holdings said the situation is not sustainable under the current tariff regime.

Zesa spokesperson Fullard Gwasira told delegates attending a Zim-Asset workshop that imports and improved generation at some local units has helped to increase availability of electricity.

“I’m sure you have noticed that from January 5 there hasn’t been load shedding anywhere in Zimbabwe,” said Mr Gwasira.

“We have an importation programme; we are getting power from Mozambique and South Africa, but at a higher tariff than our retail price so the current situation (of uninterrupted supplies) is not sustainable at the current tariff rate.”

Zesa is paying 15,5c kWh for imports from Mozambique and 13c kWh from South Africa. It charges 9,89 kWh.

The power cuts had been so severe with many residents suffering up to 18-hour blackouts. The rolling cuts were also hurting businesses, particularly mining companies.

Energy and Power Development minister Samuel Undenge said recently there is need for an increase in electricity tariffs as they are lower than the cost of production.

He said the tariff increase would enable the power utility to generate enough revenue to finance capital projects and imports. The Zimbabwe Energy Regulatory Authority is expected to approve the proposed electricity tariff increase requested by Zesa.

“Our current tariffs have not been cost reflective,” said Minister Undenge.

“I am sure we will all agree that our consumers have not been paying and if $1 billion which is owed Zesa was paid then there was no need for us to get a loan from China to expand the Hwange unit seven and eight.

“Most of our neighbours have been increasing power tariffs by 10 percent yearly so this increase is important so that we can be able to finance new projects and the retooling exercise at our thermal stations.”

Government is implementing various projects to increase power availability. These include expansion of Kariba Hydro Power Station and Hwange Thermal Power Station.

The two projects will add a total of 900 megawatts to the national grid. The Kariba project is already 40 percent complete while Hwange is 5 percent complete, Zesa said.

Kariba water levels up

Kariba water levels up

Walter Nyamukondiwa Chinhoyi Bureau
Water levels in Kariba Dam have significantly improved following rains that have pounded the catchment area in recent days, raising hope that levels will rise to allow for resumption of normal power generation.

The Zambezi River Authority (ZRA) last year imposed a cap on daily water allocated to Zimbabwe and Zambia power authorities to stem the rate of water loss.

Online newsletter, Wild Zambezi, also reported a significant rise in water levels in Victoria Falls further up the Zambezi River.

Using a comparison of two aerial images taken on December 4, 2015 and another one taken on January 15, 2016, it managed to observe an improvement in the water levels.

Water is now flowing over a bigger part of the falls.

The development has also brought hope that increased water flow will result in improved water levels in Lake Kariba downstream.

Kariba District Administrator Mr Amigo Mhlanga said although figures are not available, there has been a notable improvement in the past week.

“There is a visible improvement through looking at physical features in the lake that were significantly exposed which are quickly being covered up,” said Mr Mhlanga.

He said if rains persist up to around February 20, the water levels in the lake will get back to normal.

Traditional leaders recently held rain-making rituals to appease the gods and ask for rain.

The ceremony follows a similar one conducted in Zambia.

Mr Mhlanga said water from Sanyati and Nyaodza rivers was now flowing into the lake.

“The flowing of Sanyati and Nyaodza rivers gives us hope that water levels will improve significantly,” he said.

The ZRA had not responded to questions sent to them.

Statistics from the ZRA website show that in the week ending January 18, water levels had dropped to 53 percent from 54 percent and the tide is expected to have been overturned with significant rains registered in subsequent weeks.

Mozambique power imports to cost +15c/ kilowatt hour

Mozambique power imports to cost +15c/ kilowatt hour

power lines

Felex Share, Senior Reporter
Zimbabwe will import 100 MW from Mozambique at more than 15 cents per kilowatt hour and there is need for stakeholders to accept an electricity tariff increase if load shedding is to be minimised, Zesa Holdings said yesterday.

To finance power imports and emergency power projects, Zesa has proposed to push electricity charges to 14,64c/kWh up from 9, 86c/kWh.

Stakeholders, chief among them industrialists, miners and farmers, have shot down the proposal arguing it would push up production costs.

Zimbabwe has been enjoying an improved power supply situation in the past few weeks mainly because of power imports.

South Africa’s Eskom has been selling 300 MW to Zimbabwe since last month and the country is on the verge of clinching another 100 MW deal with Mozambique.

Energy and Power Development Minister Samuel Undenge will lead Zesa officials to Mozambique on Friday to finalise the deal.

The power utility’s officials were in Mozambique last week.

Zesa spokesperson  Fullard Gwasira said the power imports were not coming at a cheap price.

“It’s important to say that the power will be imported at 15.5c/kWh,” he said.

“This is against a backdrop of the tariff of 9.86c kWh. We are negotiating with Electricidad de Mocambique (EDM) for 100MW of imports to augment local generation to minimise the effects of load shedding.

“The negotiations are part of the emergency power supply intervention strategies to source more electricity to fill the void that has been caused by the declining water levels at Lake Kariba that have resulted in suppressed generation at Kariba Power station, from 750MW to 275MW.”

The average electricity cost in the Southern African region is 14c/kWh.

Zimbabwe yesterday was generating 1, 276 MW locally against a forecast demand of 1, 375 MW.

Stakeholders are resisting a tariff increase but Minister Undenge has indicated that there is no going back on a tariff increase because Zesa has to urgently finance required power generating projects.

Among projects expected to ease the power crisis is the 200 MW emergency power plant to be installed at Dema Substation in the next seven weeks.

Sakunda Holdings won the contract.

Gwasira said contract negotiations were underway ahead of the installation of the diesel plant in the next few weeks.

Hwange power station generation capacity declines

Hwange power station generation capacity declines

Oliver Kazunga Acting Business Editor
HWANGE Thermal Power station’s generation capacity has gone down to about 200 megawatts against an installed capacity of 920MW.

The Zimbabwe Power Company (ZPC) indicated on its website that the country’s largest coal-fired power station was producing 202MW due to continued generation constraints as the plant’s units, 4, 5 and 6 experienced faults between Saturday and yesterday.

Before the faults, Hwange’s output was about 450MW daily.

“Unit 4 was taken out of service on January 23 . . . for tube leak repairs on the HP feed water heaters and ID fan repairs. The unit is expected back in service later on today (yesterday).

“Unit 5 tripped on January 25 . . . on drum level high following boiler trip on flame failure. The unit was synchronized at 06.47hrs.

“Unit 6 tripped on January . . . on drum level high following the loss of a mill due to a gearbox failure. The unit had only one mill in service.

“Preparations for the repair works are in progress and unit return to service date will be advised,” said ZPC.

As a result of the technical fault at the thermal power station, the country was as of yesterday producing 840MW.

Hwange Power Station’s Unit 1 was taken out of service in July last year for internal boiler tube leaks with the unit now awaiting commissioning after roter earth repairs.

Over the years, equipment at the country’s power stations has been experiencing constant breakdowns due to old age resulting in Zimbabwe experiencing a huge energy deficit.

Against this background, the government has among other initiatives aimed at boosting power generation capacity, embarked on a programme to upgrade the Hwange Thermal Power plant.

Last December, Finance and Economic Development Minister Patrick Chinamasa announced that China had committed to provide a $1.2 billion loan for the refurbishment of the Hwange thermal power plant.

It is hoped that the upgrading exercise at Hwange will add 600MW of power to the national grid.

Zimbabwe is one of the countries in Southern Africa that is experiencing a critical power deficit due to lack of investment in electricity projects.

Electricity demand has continued to outstrip supply due to factors such as increased population growth.

As demand outstrips supply, load-shedding and power rationing characterise the economy, a development which has seen industries failing to stimulate production to competitive levels.

Power generators disregard Kariba warnings

Power generators disregard Kariba warnings

SAMUEL UNDENGE12

Energy and Power Development Minister, Samuel Undenge

THE Zimbabwe Power Company (ZPC) has disregarded an order by the Zambezi River Authority (ZRA), which administers the Zambezi River and the use of the Kariba Dam on behalf of the governments of Zimbabwe and Zambia, to stick to recommended power generation limits.
The dam regulator ordered ZPC to generate electricity not exceeding 275 megawatts (MW) at Kariba South Power Station, which has an installed capacity of 750MW, due to diminishing water levels in the lake.
But electricity generation statistics for Kariba South Hydroelectric Power Station, which the Financial Gazette’s Companies & Markets (C&M) has been observing over the last few weeks, show that the power plant has been generating an average of 400MW.
The translates to an over-use of the water resource, which is likely to reduce the water levels in Lake Kariba to critical levels, a situation that could force ZRA to close the Kariba South Hydro power plant.
If water is depleted, the danger is that the dam will require three or more good rainy seasons to get back to normal supplies of water to allow the power plant to generate electricity, an outcome that could drive the economy to collapse.
Kariba Dam’s water level should be maintained at 475, 50 metres above sea level to sustain its socio-economic mandate for the two southern African countries.
Currently, water levels at the dam are at around 477 metres, a situation described by Zambia’s Energy Minister, Dora Siliva, as “extremely dangerous”.
C&M) has established that ZPC, a power generation subsidiary of ZESA Holdings, and its Zambian counterpart, ZESCO, have continued over-using the water for electricity generation.
Speaking exclusively to C&M last week, Energy and Power Development Minister, Samuel Undenge, who is also ZRA chairman, said: “As chairman of ZRA, we have been urging utilities to adhere to the allocation of water in terms of generation.”
“We may have one or two cases where a country tries to exceed the limit but we immediately come in and tell them to adhere to their allocation.
“I think where you find ZPC producing more electricity, they will be using water they would have saved. During the off peak period, ZESA gets imports from South Africa and switch off all the units at Kariba. So, the next day, they (ZPC) then use that water they would have saved to generate power.
“ZRA constantly monitors the use of water at the dam and they also constantly ensure that if any country exceeds its allocation then they go and warn that country to adhere to the allocated limit.”
Zambia, which also draws water from the Kariba Dam, has been overusing the water.
Zambia’s Energy Minister, has said about the current circumstances: “The situation is dire, the levels of Kariba are at extremely dangerous levels.”
Kariba South Power Station has been the biggest generator of electricity and has been producing relatively cheaper and reliable electricity for Zimbabwe.
The power station has been supplying about 60 percent of Zimbabwe’s electricity at an average cost of US$0,02 per kilowatt hour (kw/h) while 40 percent of electricity has been generated from four thermal power stations at Hwange, Harare, Munyati and Bulawayo at an average cost of between US$0,08 and US$0,16 per kw/h.
The high costs are due to inefficiencies in these thermal power stations, associated with ageing equipment, a situation which makes the domestic production of electricity relatively expensive compared to regional counterparts.
Hwange Power Station has been generating about 500MW on average while Munyati Power Station has been producing an average of about 25MW.
The situation at Kariba Dam has forced both Zimbabwe and Zambia to prepare for the total shut down of the hydro power plants at Kariba Dam.
The Zimbabwe government, through ZESA, will set up a 200MW emergency power plant at Dema sub-station in Seke Communal lands powered by diesel generators.
ZESA has also intensified power imports from South Africa’s power utility, Eskom. Zimbabwe is importing 300MW from Eskom at a cost of US$0,13 per kilowatt hour.
The Zambian government, which has heavily relied on hydro power, is setting up emergency thermal power plants to feed 250MW to the national grid by March this year and a 200MW power ship to be docked off the cost of neighbouring Mozambique.
It is also understood that Zambia is setting up a 300MW coal power station to start operating in June this year.
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ZESA pays US$236m for imports

Zesa pays US$236m for imports

Zesa pays US$236m for imports

Tinashe Farawo
THE reduction of electricity generation due to depressed power production at Kariba Power Plant has cost Zesa US$236 million through emergency imports over the last few months, The Sunday Mail has established.
Zimbabwe is importing power from South Africa (300MW) and Mozambique (50MW).
While Zesa buys electricity from Eskom of South Africa at USc13 per kilowatt hour, the utility sells it to its local customers for USc9/kWh.
As a result, Zesa has applied for an immediate 49 percent tariff increase to energy sector regulator to offset such losses.
If approved, the cost of power will rise to about USc14/kWh.
Information gathered last week shows that Zesa has spent US$193,6 million to buy 1 027GWh in emergency power. Comparatively, Zesa would have used about US$28,9 million to generate and distribute an equal amount of power if Kariba was working at optimum level.
Zesa spokesperson Mr Fullard Gwasira said: “The impact of reduced production at Kariba currently stands at US$236 million.
“It is important to note that the tariff increase will improve energy efficiency, improve economic activity, service delivery and of cause reduced load shedding.”
Generation at Kariba Hydro Power Station has been reviewed from 750MW at the start of 2015 to 475MW by December last year, and now to 285MW owing to reduced water levels at the dam.

Kariba Dam levels down to 12 percent

Kariba Dam levels down to 12 percent

via Kariba Dam levels down to 12 percent – NewZimbabwe 19/01/2016

WATER levels in Lake Kariba have dropped to 12 percent of capacity, the authority in charge said on Tuesday, raising concerns about severe power rationing in Zimbabwe and Zambia.

Both countries rely heavily on the Kariba dam for electricity.

The levels were 477.25 metres (1,500 feet) above sea level on Monday, just two metres above the point their working capacity, the Zambezi River Authority, which manages the lake for Zambia and Zimbabwe, said on its web site.

“The Kariba Lake was created and designed to operate between levels 475.50 metres and 488.50 metres,” it said.

The dam was 12 percent full on Monday compared with 53 percent on the same date last year, underscoring the severity of a prolonged drought that threatens crops across the Southern African region where the United Nations has warned that 14 million people face hunger.

Zambia asked South Africa last week for up to 300 megawatts (MW) of emergency power to ease an electricity crunch that has hit mining companies already grappling with a slide in global copper prices.

Meamwhile, on Monday, water flow measurements from the famed Victoria Falls, a major tourist site, were recorded at 492 cubic metres per second, close to the historic low of 390 cubic metres per second posted in the 1995/96 season, its authority said.

Zambian power companies and mining firms in August 2015 agreed to cut power supply to the mines by 30 percent due to a power deficit which rose to 985 MW in September from 560 MW in March.

Power tariff hike faces resistance

Power tariff hike faces resistance

ZESA queueBusiness Reporter
BUSINESS member organisations comprising manufacturers, miners and farmers have united to oppose the proposed tariff increase by the power utility, the Zimbabwe Electricity Transmission and Distribution Company saying it will reverse progress made towards addressing competitiveness.

The Confederation of Zimbabwe Industries, the umbrella body for manufacturers, the Chamber of Mines, Zimbabwe Farmers Union, Zimbabwe Commercial Farmers Union and the Commercial Farmers Union met and resolved to oppose the proposed tariff increase arguing that it is counterproductive.

This comes after the Minister of Energy and Power Development, Dr Samuel Undenge, last week said that Government was not going back on electricity tariff increases.

He said the proposed tariff increase is justified as ZESA was selling electricity at below cost and because the cheapest source of power, Kariba Power station has reduced production forcing the utility to import power. But Dr Undenge said he would ensure a win-win tariff.

The Zimbabwe Energy Regulatory Commission is currently conducting consultations on the proposed tariff increase.

In a statement yesterday the business member organisations said Zimbabwe cannot have cost increases in any of the inputs at this stage.

“Business member organisations met to discuss the proposed 49 percent electricity tariff increase application by ZETDC. It was clear that every sector represented at the meeting cannot afford any tariff increase and in fact some of the companies belonging to these sectors are struggling to pay electricity tariffs at current levels as evidence by the current $1 billion owed to ZETDC by some consumers,” the business member organisations said.

Instead of a tariff increase, the business member organisations want ZESA group to be restructured to reflect the reduced levels of electricity production, efficiency to be increased at generation centres and that the utility should reduce payroll costs.

“Inefficiencies at power stations need to be improved as we understand that energy conversion at Hwange Power Station is about 21 percent when the industry norm should be above 35 percent,” business said.

The organisations are not happy with plans introduction of diesel generators for 200MW at Dema substation saying that it will come at a huge cost to the economy.

“We are seriously perturbed by the decision that was taken to bring into the tariff equation the emergency power from diesel generation. This proposed 200MW emergency power is coming at a huge cost to the economy. The investment by the economy in this proposed scheme can be better utilised if deployed to give permanent solutions to this energy crisis, even if it means that permanent energy will be realised 3-5 years down the line,” the organisations said.

They said all imported power is coming from utilities operating in weak currencies and therefore the cost of power should be low not to cause a review of tariffs upwards.

Focus should be given to improving inefficiencies which could help create a virtual power station with an output of 300-500MW.

“This must be the focus area of the utility instead of taking the simplistic route of hiding these inefficiencies through tariff increases. Significant cost reduction can be realised within the utility itself. With pre-payment system now supposedly working, banking halls can be dispensed of. Head office overhead can be significantly reduced.

“Taking depreciation and return on assets out of the revenue required, we find that payroll costs are 32 percent and Zimbabwe Power Company and 20 percent at ZETDC which we believe should be reduced like what is happening in all other sectors of the economy,” the business organisations said.

They said regional competitiveness is under serious threat with the currency crises in emerging/regional economies.

“Strong headwinds are also facing commodities. With no monetary ability to devalue currency, there has to be internal devaluation to remain competitive. This, by definition, means costs (electricity included) have to come down,” they argued.

Reduction in power cuts looms

Reduction in power cuts looms
Mr Gwasira

Mr Gwasira

Felex Share Senior Reporter
Zesa Holdings is set to revise its proposed increase in electricity tariffs in the wake of current negotiations with Electricidad de Mocambique (EDM) to import 100MW.

The power utility’s senior officials are in Mozambique where they are expected to seal the deal today, a development experts said would impact on the proposed tariff increase.

Read more:

Power and Energy experts said if the deal is successful, as is widely expected, increased imports coupled with stable local power generation would “dilute the bulk supply tariff”, meaning that it would complement the power utility’s generation capacity.

The power utility has proposed to push the tariffs to about 14 cents per kilowatt per hour up from 9,86c/Kwh.

The proposed hike has faced resistance from farmers, industrialists and miners who argue that the move would push up their production costs.

Zimbabwe has been enjoying an improved power supply situation in the past few weeks with 300MW coming from Eskom of South Africa beginning last month.

The 100MW from Mozambique will be important to the national grid considering that a city like Mutare needs at least 200MW a day, experts said.

Zesa spokesperson Mr Fullard Gwasira confirmed the officials’ were in Mozambique for negotiations with EDM.

“I can confirm that Zesa officials left to negotiate with EDM for additional power imports,” he said.

“This is against the background of the demand and supply mismatch, where demand is higher than the supply.

“Zesa will always look for opportunities to eradicate this deficit. I cannot comment further on the deal until it is concluded. These power imports explains the improved power supply in the country. There has been no load shedding in the past weeks because of interventions by sister utilities and our own initiatives.”

Mr Gwasira said the power imports were pre-paid, hence the need for consumers to do the same.

“For all these initiatives in the region, we are pre-paying and we urge customers to pre-pay because this is the only way we can guarantee this improved electricity supply situation,” he said.

Zimbabwe as of yesterday was generating 1 270MW against a forecast demand of 1 400MW and if the power imports of more than 300MW are added it means supply will exceed demand.

Sources said the negotiations for the supply of 100MW from Mozambique were almost complete.

“If all goes according to plan, the officials will seal the 100MW deal tomorrow,” said a source. “If successful, load shedding will be reduced and it has also a net effect of further diluting the bulk supply tariff. Power imports make electricity available as well as affordable.”

The Zimbabwe Energy Regulatory Authority is holding stakeholder consultations on the proposed increase and is meeting farmers, industrialists and miners, among other stakeholders.

Energy and Power Development Minister Dr Samuel Undenge has indicated that there was no going back on a tariff increase because Zesa has to urgently finance required power generating projects.

The average electricity cost in the Southern African region is 14c/kWh.

Among projects expected to ease the current power crisis is the 200MW emergency power plant to be installed at Dema Substation in the next seven weeks.

Government is also working on various projects, chief among them the expansion of Kariba South Power Station and Hwange Units 7 and 8, to add 300MW and 600MW respectively to the national grid.

While the big projects materialise, the Dema emergency diesel power plant would be complemented by another 120MW from the Mutare Peaking Power Plant, which is expected to take under 18 months to complete.

The plant is one of the priority projects targeted under Zim-Asset, and contract negotiations between the contractor, Helcraw Electrical (Pvt) Ltd and the Zimbabwe Power Company have been concluded.

Several power stations are being upgraded, with Zesa Holdings recently securing a $87 million loan from India to retool Bulawayo Thermal Power Station.

The country has been facing a serious power shortage that has affected industry, farmers and domestic consumers as a result of low investment in electricity generation.

Kariba power plant risks shutdown

Kariba power plant risks shutdown

via Kariba power plant risks shutdown – DailyNews Live • 18 January 2016

HARARE – Concerns surrounding the structural health of the Kariba Dam have risen following an announcement that the region could be facing a shutdown of its hydroelectric plants, as water levels drop “dangerously” low.

Zambian Energy minister Dora Siliya raised the alarm last week when she announced that water levels in the dam had dropped to below 14 percent, prompting the shutdown of the dam’s hydroelectric plants.

The situation was exacerbated by a 4,6 magnitude earthquake, which hit the Kariba area and parts of Zambia on January 12.

The incident raised fears about the vulnerability of the dam wall, although no damages were recorded.

Lake Kariba, which straddles the border between Zambia and Zimbabwe, generates up to 40 percent of hydropower to the southern African region and could have catastrophic effects should its walls fail.

According to a statement, Chipilaika Mukofu, director at the Geological Survey Department in Zambia, said that the possible
effects of the earthquake were being investigated.

Mukofu also said that the epicentre of the quake was within sensitive reach of Lake Kariba and that the stability of the dam wall could be affected as a result.

A recent report by the Institute of Risk Management SA (IRMSA) detailed the implications of a failure at the Kariba Dam.

The report, titled Impact of the failure of the Kariba Dam, said the dam was in a dangerous state, with a gaping crater of eroded bedrock undercutting its foundation.

“While water levels are dangerously low, which takes some pressure off the failing construction of the dam for now, the bigger picture of the state of Kariba Dam is critical.

“Climate change, high rainfall patterns impacting future dam levels and water inflows from other regions, and potential seismic activity, could all contribute to the likelihood of failure of the Kariba Dam,” wrote Kay Darbourn, researcher and writer of the report.

“In December 2014, the critical period was defined as ‘the next three years’, while the rehabilitation project is only due for completion in 2025.”

The latest development comes after Zambia and Zimbabwe last year signed a deal worth $294 million to repair the dam, but efforts seemed to have been delayed by the Zambezi River Authority as tender processes continued.

With some countries in the southern region relying mainly on hydropower from the Zambezi, several economies would be severely affected should the dam collapse. South Africa alone will lose 1 500 megawatts (MW) of imported power, the report said.

Meanwhile, Energy minister Samuel Undenge last week said the country was working on a number of power projects to hedge itself against acute power shortages that might emanate from low water levels in Kariba Dam.

“There are plans to build the Batoka Dam and that one will also produce relatively cheap power. The feasibility studies will be completed by mid-year then the tenders for contractors will be floated,” he said.

“Beginning of next year, work at Batoka will start,” he added. Undenge said construction of the Batoka Dam would take five years.

“Construction work starts in 2017. We expect it to be completed by 2023,” he said.

The Batoka project was initially stalled by a dispute over the payment of the Central African Power Corporation debt, incurred at the construction of the Kariba Dam in the Rhodesian era. Zimbabwe paid off its share of the debt to pave way for the $3 billion project.

The Batoka hydro-electricity project is a three-phased project, which involves construction of the dam, construction of the power station and construction of the transmission lines.

Upon completion, Batoka power station will generate
2 400 megawatts of electricity, to be shared equally between Zimbabwe and Zambia.

The two countries are presently experiencing serious power deficits following the drop in water levels at the Kariba Dam where the two countries share a hydro-electricity generating plant.

As of last week, Kariba was generating about 470 megawatts of electricity from about 750 MW last August when the Zambezi River Authority introduced water rationing to maintain acceptable water level.

Other projects in the pipeline include the Hwange Expansion Project, to produce an additional 600MW of power, installation of two units at Kariba to generate an additional 300MW, work at the Bulawayo thermal power station and at Munyati power station.

Farmers reject 49pct power price hike

Farmers reject 49pct power price hike

via Farmers reject 49pct power price hike – NewZimbabwe 13/01/2016

FARMER organisations on Wednesday objected to the proposed increase in electricity tariffs which they say will drive up the cost of production and compromise food security at a time the southern African nation is facing its worst drought in years.

Power utility Zesa Holdings subsidiaries have proposed a 49 percent tariff hike to 14,69 cents per kilowatt hour which they say is cost reflective and necessary to augment emergency power imports. Zesa has recently started to import 300MW from South Africa’s Eskom to augment local generation.

Zimbabwe Power Company (ZPC) is proposing a 22 percent increase in power costs from 5,06 cents per kilowatt hour  to 6,64 cents per kilowatt hour on sale to the distribution subsidiary, ZETDC. ZETDC is proposing to sell the power to consumers at 14,69 cents per kilowatt hour from 9,86 cents, an increase of 49 percent.

According to the ZPC website on Wednesday, the country  — which has an installed capacity of 1,960 MW — was only generating 1,100MW. On Tuesday, power generation was at 975MW.

Commercial Farmers Union (CFU) President Peter Steyl told a meeting to debate the proposed tariff increase that, if implemented, it would result in a drastic fall in productivity on the farms.

“We are really not keen on this proposal because power is a key cost driver and this will drive up the cost of food. Already with the poor rains that we are experiencing it is going to be a difficult season, adding on to the cost will not make us competitive,” he said.

Zimbabwe, like most of the region, is facing a severe drought due to the El Nino phenomenon.

Steyl said the power utility should streamline its operations and improve efficiencies to bring down costs before calling for a tariff increase.

It is estimated that close to 20 percent of the electricity generated is lost during transmission and distribution because of poor infrastructure.

Zimbabwe National Farmers Union (ZNFU) executive director, Edward Tome said an increase of the power tariff would not be affordable and result in more customer defaults.

The power utility is owed up to $1 billion, with government departments accounting for the majority of the debt. The agriculture sector is said to have accumulated debts to the tune $120 million.

“We are going to record higher consumer defaults, a development which will erode the utility’s credit rating. As it is, consumers are struggling with the current tariff,” said Tome.

The tariff increase would put Zimbabwe at par with regional peers Namibia which charges 14,21 cents per kilowatt hour and South Africa at 13, 45 cents.  Zambia charges power at 10,35 cents per KW/H and Botswana 9,74 cents.

Zesa tariffs hike panic . . . Business warns of imminent closure

Zesa tariffs hike panic . . . Business warns of imminent closure

Prosper Ndlovu Business Editor
THE proposed 22 percent electricity tariff increase will further strain already struggling businesses in the country and push other cost drivers up, economic experts have warned.

In the context of lack of competitiveness and its negative effects on the economy, it does not make any sense for utilities and service providers to increase charges as this would destroy the few surviving businesses, they said.

The power utility, Zesa, has already applied for a 22 percent tariff hike to the Zimbabwe Energy and Regulatory Authority (Zera) with Energy and Power Development Minister Samuel Undenge recently indicating the proposal could soon be approved.

While the power utility argues the increase is meant to raise funding for new power projects to ensure steady supplies, the move has riled the business community and individual consumers who feel any increase would increase the cost burden on them.

“At this juncture . . . it doesn’t make sense to bargain for wage and salary increases and raise prices of utilities within the national economy,” said Gift Mugano, a renowned economic advisor, author and trade expert.

“Instead, as suggested in the monetary policy, the prevailing circumstances call for a downward adjustment in the prices of goods and services in order to promote competitiveness and ultimately for the recovery of the economy because further prices increases would only serve to cripple the economy.”

An economic research associate with the Nelson Mandela Metropolitan University (SA), Mugano said the proposal by Zesa is retrogressive.

“What’s disheartening is that, notwithstanding this prudent advice, we’re still witnessing renewed efforts to raise prices of utilities particularly from Zesa.

“This move is retrogressive, insincere and a clear sign of a lack of appreciation of the reality,” he blasted.

Businesses have vowed to oppose the increase with the Confederation of Zimbabwe Industries (CZI) embracing the “internal devaluation” approach, which seeks to contain costs and foster a downward review of charges in an effort to boost economic growth.

While consultations are underway, Zera would likely approve the tariff increase, which would see power charges rise from the current average US9c per kilowatt hour to US12c per kilowatt hour.

Minister Undenge says the increase would fill up the gap created by the drastic fall of water levels in Kariba, home to the 750MW capacity hydro-power station, due to drought.

The Affirmative Action Group (AAG) weighed in saying Zesa should find alternative means of raising funding other than increasing charges.

“We should be cutting costs and not raising them. Undenge shouldn’t give an excuse for wanting to raise funds for other power projects. In fact, Zesa should find other ways of getting funding than raising tariffs,” AAG Bulawayo-based economic analyst, Reginald Shoko, said.

He said Zimbabwe needs to internally devalue its economy to attain the competitive edge for industries to survive.

Despite incessant power cuts, thousands of consumers are struggling to clear arrears of close to $1 billion to Zesa, accrued since adoption of the multiple-currency system in 2009.

Regarded as a high cost country, Zimbabwe continues to play second fiddle to regional economies due to uncompetitiveness of her products due to high costs of production emanating from high mark ups to sustain high overheads epitomised in the hyperinflationary era prior to dollarisation in 2009.

Studies have shown that Zimbabwe has high utility tariffs, finance charges, average wages and salaries and a multiplicity of statutory fees.

According to a cost drivers analysis report submitted to the Office of the President and Cabinet last year, major cost drivers include but not limited to municipality tariffs, environmental management fees, National Social Security Authority charges, and other non-tariff barriers that increase the cost of doing business.

The continued appreciation of the US$ against major currencies such as the South African rand, has made imports much cheaper — further widening the import bill.

Economic experts say the combination of the above factors continues to put pressure on the balance of payment position as imports of finished goods and rampant smuggling have become the order of the day leading to company closures and job losses.

Power crisis to worsen as Kariba levels plunge 17%

Power crisis to worsen as Kariba levels plunge 17%

 
 

ZIMBABWE’S power generating capacity will further decline this year to worsen an already debilitating electricity crisis after water levels at the world’s largest man-made lake, Kariba, plunged to 17% this week from 53% last year, spelling doom for the imploding economy.

Bernard Mpofu

In October, Energy minister Samuel Undenge said power output from Kariba, which dropped from 750MW in August to current levels of 475MW, would plunge further to a meagre 280MW this month.

Faced with this precarious situation, cabinet has approved the setting up of emergency diesel power plants which would trigger a significant electricity tariff increase for struggling Zimbabwean households and companies.

According to the Zambezi River Authority (ZRA)’s weekly hydrology report, the water levels have sharply declined on a year-on-year basis amid fears of a looming drought.

“The Kariba Lake was created and designed to operate between levels 475,50 metres and 488,50m, with 0,70m freeboard at all times,” said ZRA in a statement. “The Lake levels continued declining during the week under review, and closed at 477,95m on 7th December 2015, which is still lower than the level that was recorded last year (481,79m) on the same date. All spillway gates at Kariba remained closed during the week under review.”

This week, the country’s power utility Zesa announced that Zimbabweans should brace for more rolling power cuts.
“We would like to apologise to our valued consumers for the increase in load-shedding due to a technical fault at Hwange Power Station and low water levels at Lake Kariba,” Zesa said on Tuesday.

Zimbabwe’s floundering economy is projected to grow by 2,7% this year from a forecast of 1,5% despite falling capacity utilisation in the manufacturing sector and low agriculture output. Manufacturing sector capacity utilisation dropped to 34,3% this year from 36,5% last year.

Local industry, struggling due to low aggregate demand, antiquated machinery and a liquidity crunch, has blamed load-shedding as well as high cost of energy for compounding its operational challenges.

Government says supplies will begin to ease in 2017 if on-going power plant expansion projects funded by China are completed on time. China committed to invest nearly US$4 billion in the country’s energy sector as Zimbabwe looks East for capital intensive investment.

Lack of investment in the energy sector and a huge debt overhang has seen the country battling perennial power shortages, making the economy uncompetitive. The country’s existing power stations are currently generating less than 1 000MW against peak demand of 2 200MW.

Power cuts cost economy $2bn annually

Power cuts cost economy $2bn annually

loadsheddingDosman Mangisi Mining Correspondent
ZIMBABWE could be losing $2 billion annually from incessant power cuts which continue to affect productive sectors of the economy, an expert has said. Load shedding has a crippling effect on economic growth, said Gift Mugano, a renowned economist, visiting lecturer at the University of Zimbabwe and a research associate with the Nelson Mandela Metropolitan University in South Africa.

Contributing during a discussion on barriers to industrialisation at a function organised by the Zimbabwe National Chamber of Commerce (ZNCC) in conjunction with the Swedish Chamber of Trade in Harare last week, Mugano said power outages cost the country the equivalent of half of its annual national budget.

Finance and Economic Development Minister Patrick Chinamasa has pegged the budget for 2016 at $4 billion. “We’re saying load shedding is costing the economy about $2 billion every year, which is 50 percent of our national budget,” he said.

“This is coming in the form of additional expenses to companies when they are installing heavy duty generators. Companies are wasting resources buying generators and fuel throughout the year to supplement power.

“What it means here is that the total cost is equivalent to the price of setting up a new power plant, which can generate above 300MW per year. This means in six years we could be self sufficient in terms of electricity requirements.” Mugano said mining and manufacturing industries incurred a lot of expenses in order to have power for operations but still suffer from load shedding.

He said companies with the biggest power consumption have since scaled down production. “Think of mining companies, platinum mines, chrome smelters and gold producers who are the largest consumers of electricity. That’s why some have scaled down operations,” said Mugano.

“There are those who are into processing and manufacturing like Lafarge, Sable Chemicals and Delta who consume a lot of power. You can imagine what type of generator they’ll use to power their plants.

“If you go to the services sector they’re not the biggest consumers of electricity and their costs are not that much.” Mugano, however, said the granting of licences to independent power producers and tapping solar and gas projects was progressive.

The government is pursuing several power projects set to increase power output to 5,000MW from about 1,400MW. The country, at present, needs about 2,200MW. “We see the efforts around additional power generation. More can be done to create an enabling environment where companies invest in new technologies which consume less power because some of our old technologies consume more power,” Mugano said.

Power outages have forced companies like Sable Chemicals to shelve part of its operations in the electrolysis of ammonium nitrate fertiliser. The technology consumed about 10 percent of domestic output. Mining companies have bemoaned high energy costs with the Chamber of Mines in Zimbabwe calling for a flat rate.

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