Eskom could cut electricity to Zim over cash crunch - CEO | Fin24
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Eskom could cut electricity to Zim over cash crunch - CEO

Nov 21 2016 19:38
Memory Mataranyika
Harare – Eskom - whose monthly billing invoice to Zimbabwe is about $10.5m - could cut power supplies it exports to the country as Harare battles a cash crunch that has started to affect productivity in the economy.

Power utility Eskom supplies about 300MW of electricity to Zimbabwe. The electricity supplied to the country is on a “non-firm” basis and officials say it is only imported when needed by Zimbabwe, with the average monthly cost Zimbabwe has to pay Eskom coming to about $10.5m.

Engineer Josh Chifamba, the chief executive officer of Zimbabwean power utility Zesa, said on Monday that cash shortages could plunge Zimbabwe into darkness.

Zimbabwe is battling a cash crunch that has seen companies fail to repay loans and advances on time, and is causing delays in paying for key raw materials and other shipments into the country.

But the larger impact could be on power outages, with Zimbabwe highly dependent on power imports from Eskom and Mozambique. Chifamba did not mention how much was owed to Eskom.

“Eskom tariffs are a function of time of use. [The] average monthly bill is about $10.5m,” Chifamba told a Zimbabwean parliamentary portfolio committee.

He said Zesa requires about $5m for its weekly energy bills but was only managing to get $1.5m from the central bank.

The Reserve Bank of Zimbabwe has taken over apportioning of scarce foreign currency reserves and has a priority list that is outweighed by surging demand.

This resulted in some areas such as fuel and power getting insufficient allocations, heightening the threat that Zimbabwe will either run out of fuel or have power switched off by its foreign suppliers.

Power generation in Zimbabwe is constrained and engineers blame this on aged power plants and poor revenue collection by the state power utility.

Failure to pay for imported electricity supplies on time could have a bearing on negotiations with Eskom for continued power supplies from South Africa in coming seasons.

Zimbabwe has previously asked larger electricity consumers such as mines and industries to cut their usage in a bid to manage supplies.

The government this year turned down a request by the power utility to hike electricity tariffs. Zimbabwe is undertaking refurbishments at most of its power stations to expand generation capacity.

“The utility was not awarded a tariff increase since 2011 and there has been no financial provision for the temporary emergency power, and this has negatively affected financial position of the utility," Chifamba said.

“The loss as at the end of September 2016 was $140m and is projected to rise to $223m by the end of the year,” he added.

Zimbabwe also has to pay a monthly bill of about $2.6m for electricity imported from Mozambique’s Cahora Bassa dam. Another monthly bill of about $7.5m also has to go to Sakunda Energy, a local company running a diesel power plant near the capital, Harare.

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eskom  |  zimbabwe  |  africa economy  |  electricity


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