State of the Energy Sector in Zimbabwe- full ministerial statement

Intervention measures in the power sector

Load shedding is not a sustainable method to deal with the problems that I have spoken to.  Load shedding is not sustainable for exporters that are earning the country’s much needed foreign currency and contributing to economic growth of the country.  For every unit of unsaved power arising from load shedding of productive sectors, the country losses, according to research, $3.20 in its GDP.  We have transformers that have gone missing in farming areas and now the thieves have moved to the high density areas where they are operating in groups and action needs to be taken.

However, there are quick win interventions in power imports from ESKOM and HCB.  The power imports of up to 400 megawatts can be unlocked by a bankable plan to both ESKOM and HCB.  The imports would securitise power supply for the exporting mines and industries and release power for the other customers, some of whom are prepaying.  It is proposed that exporters pay their electricity bills in foreign currency in proportion to their foreign currency retention percentage.  This arrangement is estimated to raise $11 million against an estimated bill of $14 million per month.

A Statutory Instrument to this effect is being considered.  The foreign currency generated would go towards meeting the current power import bills plus a portion for the amortisation of arrears.  In addition, a portion would be used to fund the procurement of critical generation spares to sustain output of the old Hwange Power Plant.  Critical transmission, grid stabilisation and distribution spares such as transformers, prepaid metres and so on, would be also funded from these inflows.

The replacement of 2000 vandalised transformers would see power restored to over 25 000 customers that have gone for long periods without electricity.  These include schools, clinics, growth points, farms, businesses and domestic points.

The Hwange power station expansion flagship project whose groundbreaking was commissioned last year is under consideration and will remain on track including repayments for Kariba South Extension.  An urgent support bail out of RTGs 63 million monthly from Treasury is required to enable ZETDC to continue supplying electricity to the nation and support economic activities.  This will cover the funding gap created by the absence of a tariff adjustment which recognises the monetary policy and introduction of the interbank market to cover foreign currency purchases.

With the current tariff, ZETDC is collecting between RTGs 60-70 million against a monthly budget of RTGs 130 million to cover the bare essentials.  ZESA is technically solvent and I am sure Hon. Members are fully aware of this.  It is struggling to fully fund operations.  The severe cashflow crisis being experienced would see operations grinding to a halt in the not too distant future, unless support is rendered as the funding gap increases every month cumulatively, as people fail or decide not to pay the bills.  The price of critical generation consumables has increased by an increase of 250%.  Coal suppliers at the moment are agitating for a price review.  Import duties should be exempted.  We submit on diesel for power generation and importation of critical spares for the generation transmission and distribution networks.

Overtime, once stability in the economy has been achieved, ZESA can be allowed to have a staggered approach to increasing tariffs in order to achieve cost reflectivity or in sync with economic activity.  There is need to review the tariffs in order to cater for inflation and make the tariff cost effective.  We have a number of priority projects  that need to be executed diligently. In order to address the power deficit in the country, a number of priority projects are at different stages of implementation by ZESA.  I will just mention the names of the projects:

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