ZESA warns of power cuts

State power utility, Zimbabwe Energy Distribution and Transmission Company (ZETDC), says the country faces power cuts because it owes suppliers over $734 million.

Zimbabwe, currently generates just over 1 000 megawatts from its ageing plants, about half of peak demand, and makes up for the deficit through imports.

A combination of increased imports and collapsed industrial demand due to factory closures has, since December 2015, given the country some reprieve from rolling power cuts that used to last as much as 18 hours in a day.

Now, ZETDC is warning that the honeymoon could soon be over.

The parastatal said it is technically insolvent and will require a bail out, after accumulating liabilities exceeding its current assets.

It owes fellow ZESA Holdings subsidiary, Zimbabwe Power Company, over $700 million and $8.8 million to South Africa’s Eskom. Both internal and external suppliers are threatening to withdraw power supplies, ZETDC managing director Julian Chinembiri said.

Mozambique’s firm HCB reduced exports to Zimbabwe from 100 megawatts to 50 megawatts daily in the last two months, citing arrears.

In total, ZETDC owes creditors $987 million and a further $330 million in loans. It is owed $1.075 billion by consumers, mostly parastatals, local authorities and private companies.

This year, the parastatal expects to report a loss of $189 million after the Zimbabwe Energy Regulatory Authority (Zera) in August rejected an application to increase tariffs by 50 percent. ZETDC is currently selling power to its customers at 9.86 cents per kilowatt.

“We are technically insolvent as a company,” Chinembiri told a workshop on energy yesterday.

“We thought we will turnaround the company, especially when we were going to be awarded the tariff (increase). The company will require financial bailout in the near future, but (not sure) from where because the fiscus does not have money.”

The parastatal has so far filed more than 500 lawsuits to recover outstanding bills.

Chinembiri said that the company is surviving on revenues generated from domestic consumers through its prepaid meter system.

“We are collecting the (domestic) debt (through deductions on cash power purchases) although the rate is a bit low. We have increased now to 50 percent (of any power purchase), from 40 percent. That money we are collecting from prepaid electricity is what we are using to run the company,” he added.

ZETDC introduced prepaid meters in 2012 to increase revenue generation and manage consumption and has to date installed 560 000 meters. It plans to install another 130 000 meters by year end.

“Payment for these (meters) is a challenge. We have 4 500 meters stuck in Beira for the month because of non-payment,” added Chinembiri.- The Source

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