Eskom won't pull the plug on Zim

Power provider Eskom will not cut off electricity to Zimbabwe at the end of the month after the Reserve Bank of Zimbabwe stepped in.

Eskom spokesman Khulu Phasiwe said the utility had recently received a letter from the bank saying the state would step in to clear the Zimbabwe Electricity Supply Authority's arrears.

"The Zimbabwe central bank wrote to us and is providing a government guarantee for the debt," Phasiwe said. "That is enough for us [Eskom] that the state has now stepped in. It's not an unusual arrangement for states to provide guarantees and even us at Eskom, we have government guarantees for the debts which we owe."

He said Zesa had been "pro-active" in its engagement with Eskom over its challenges in making payment and there was no vendetta against Zesa.

"We are not even singling out Zimbabwe for not being able to pay. They have publicly acknowledged what they owe to Eskom. We as Eskom are not going to say the amounts owed to us in public, except that they [Zesa] are now making arrangements to facilitate payment."

Eskom supplies 100MW to 300MW to Zimbabwe, depending on how much electricity Zesa needs at any given time.

Zimbabwe is a member of the Southern African Power Pool, through which Eskom sells excess electricity to Botswana, the Democratic Republic of Congo, Lesotho, Mozambique, Malawi, Namibia, Swaziland and Zambia.

At Independence Day celebrations last month, President Robert Mugabe boasted that Zimbabwe had not experienced power cuts for the past 16 months. A series of nationwide blackouts in 2015 threatened to finish off the nearly comatose economy.

The cuts have since eased, in part thanks to power imports from South Africa and Mozambique. South Africa is owed $40-million (about R515-million) by Zesa and Mozambique $8-million. The debts make Mugabe's boast hollow.

In 2012, Zesa faced threats of a power cut from Mozambique over an $80-million debt which Zesa had run up and was struggling to service.

Zimbabwe needs 1400MW of power to meet its domestic electricity requirements. But aged equipment at its Kariba and Hwange power stations has left it unable to meet demand. Production figures from the Zimbabwe Power Company this week indicated that the two power stations produce a combined 981MW of electricity; Kariba 614MW and Hwange 367MW.

Lately, Eskom has taken a tough stance against the non-payment of electricity bills, with defaulting municipalities in South Africa also under pressure to pay up. A task team set up to tackle the problem had "made significant progress", Co-operative Governance and Traditional Affairs Minister Des van Rooyen said last week.

Earlier this year Eskom had threatened to cut power to several municipalities that owed it a total of just over R10-billion .

The RBZ has been forced into a juggling act as it allocates scarce foreign currency to competing interests that include fuel and power import bills. Cash shortages have put a severe strain on the ability of companies to service their foreign debt obligations.

Zimbabwe Energy Minister Samuel Undenge could not respond to questions. RBZ governor John Mangudya did not respond to e-mailed questions.

Consumers in Zimbabwe owe Zesa more than $1-billion in arrears. Many consumers have struggled to pay because of low disposable incomes and increased inflation.

In 2016, Zimbabwe's power utility had its pleas for a tariff hike rejected twice by the Zimbabwe Energy Regulatory Authority. Zesa holds that a tariff hike would solve its recapitalisation efforts aimed at increasing its generation capacity.

Zesa chairman Herbert Murerwa said it needed a cost-reflective tariff. "Zesa has a dire need to undertake maintenance and repairs to its equipment and to invest in general."

Zesa's tariff is pegged at 9.83¢ per kilowatt-hour against the regional average of 14.60¢. Zimbabwe's manufacturing sector, which is struggling to retool and increase production, is wary of the impact of a tariff hike.

Denford Mutashu, president of the Zimbabwe Confederation of Retailers, said a proposed tariff hike would be counter to industry expectations of a reduction in the cost of doing business.

"It is high time that industry, with support from government, looks to embrace alternative sources of energy. The price increase is ill-timed. The net effect is to make locally manufactured goods prices go up and beyond the reach of already struggling consumers," he said.

Davison Norupiri, president of the Zimbabwe National Chamber of Commerce, said a hike would hamper industrial growth and counter the gains due to government policies.

A report commissioned by the regulator on the cost structure of Zesa's operations is due at the end of this month.