Eddie Cross says Zimbabwe is not a failed State yet – just remove the Reserve Bank of Zimbabwe from the interbank market and prices will fall

Thirdly, Electrical Energy: We have made a start, we fired the top management and the Board, but that is just the start. This sector is an unholy mess. We have just spent, between Zambia and ourselves nearly a billion dollars on doubling the capacity of Kariba – with no increase in water supply? We have then allowed the dam to operate well above capacity because the power coming out was cheap and available and as a country with full supply at low prices, we went to sleep. Now – disaster strikes as the inevitable happened – we ran out of water.

Then at Hwange, where we built a huge thermal power station nearly 60 years ago, we have been paying little attention to coal supplies. Hwange Colliery with millions of tonnes of coal reserves, is running out of coal? They have perhaps six months left in the open cast mine and Hwange Power Station must rely on private sector operations. The conveyor system, the drag line, tens of millions of dollars of plant and equipment is broken down and crude, out of date methods of mining are being employed at much higher cost.

Our currency collapses and we do not increase prices for coal. Are we then surprised that the coal stops coming? Are we crazy? We have spent tens of millions of dollars on the three small thermal stations with less capacity than one turbine at Hwange. Hwange uses thermal coal at half the cost of other forms of coal which are used in these old stations, who in the world spends money on coal fired stations that were built in the 1920’s and 30’s?

We need new power sources – every home should have solar panels on the roof. Solar can supply our needs during the day – without storage, at very low costs. Let’s get an emergency program under way. We need a new major thermal power station that uses coal – let’s make it happen, its private sector driven, keep it that way but support them financially, its only money. And for heaven’s sake, raise the price of power to reflect current costs. The only short term solution is to import power and for that to happen we have to pay for the stuff.

Finally, Prices: I say prices because what we have right now is not inflation in the normal sense – its price rises driven by speculation in our currencies. This is fueled by the Reserve Bank with its mismanagement and manipulation of the interbank market and the foreign exchange system as a whole. The ability of the private sector (or speculators) to make a margin, sometimes a massive margin, on simple currency deals every day is just too great at the moment and the only way to stop the practice is to enlist the market.

We know how to do this – do we think we are the only country in the world that has had this problem, if we do we are stupid and I do not think that is the case. We must make it expensive to secure supplies of local currency by raising short term interest rates to a punitive level. We must make the official, interbank market for foreign exchange work so that the exchange rate in the Banks has credibility and when we want foreign currencies, we can buy them and remit them to clients and suppliers outside the country. We cannot do that if the Reserve Bank is allowed to unilaterally take foreign currency out of our bank accounts for their own use and replace it with local electronic currency at a false exchange rate. Make all Banks sell the foreign exchange that is available on the interbank market every day and allow people to buy from the market through their banks what they need. The exchange rate will strengthen and prices will go down, automatically. Is that so difficult to understand and do? – Byo24

(337 VIEWS)