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Eskom threatens power cuts to Zim, which owes millions

May 08 2017 07:37

Cape Town – Eskom has threatened cutting power to Zimbabwe in June if its power utility Zesa does not clear its debt arrears of over R118m, according to a report on Monday in the country’s state-owned newspaper, The Herald.

Zimbabwe, which uses over 1 400 megawatts per day, risks losing 300 megawatts in June, which would see power cuts effecting industry and winter wheat cropping under way, the newspaper explained.

Acting Eskom CEO Matshela Koko is quoted in a letter to the Zimbabwe Electricity Supply Authority (Zesa) on 24 April saying: “The balance as at end of March 2017 according to the plan should have been R484 721 980, but the actual balance was R603 176 479, leaving a shortfall of approximately R118 545 499.”

In the letter, he accepts a request by Zesa to delay that repayment plan from the end of March to the end of May 2017, but warned that “no further lenience or accommodation will be made”.

The Herald said that the Zesa had made payment plans in 2017 with regional power utilities, but “foreign currency shortages have seen it defaulting”. Zesa owes Eskom a total of R1.078bn and Hydro Cahora Bassa R540m.

The report comes after Public Enterprises Minister Lynne Brown told Parliament in December 2016 that Zesa’s current financial guarantee amounts to R500m and the money owed to Eskom therefore doesn’t expose the South African power utility financially.

“Eskom is currently looking at increasing the financial guarantee to cover for future power purchases,” Brown said.

She said Eskom is taking additional measures to ensure that Zesa settles its debt, which includes:

  • Ongoing contact between Eskom and the leadership at Zesa to monitor payments; and
  • Mechanisms that Zesa is putting in place to address the foreign currency reserves challenge of the Zimbabwean central bank to ensure its power utility meets the ongoing payment obligation.

“Zesa has recently made a number of substantial payments,” Brown said, “for example: during November up to December 1, it has paid R198.2m.”

Eskom said there is an arrangement among southern African power utilities to sell surplus electricity to each other.

Eskom’s regional development strategy involved creating the Southern African Energy Unit, through which South Africa imports electricity from Lesotho, Mozambique and Namibia, and sells electricity to Botswana, Lesotho, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe.

Eskom’s tough stance on defaulting bulk supply clients has been intensifying, with some South African municipalities experiencing power cuts due to defaulting on payments.

Eskom said it will continue to work with all municipalities to develop long term sustainable plans that ensure that municipalities stay out of the debt trap.

"Eskom is obliged to supply electricity on a financially sustainable basis. Should the municipalities fail to honour the afore-mentioned payment agreements, Eskom reserves the right to implement the interruptions within seven days of the breach," Eskom said in a statement recently.

"Municipal customers are encouraged to engage with their supply authorities to get updated information on their municipalities’ arrears situation."

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eskom  |  electricity

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