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Zesa will be able to draw down on the loan from China Eximbank for the expansion of Kariba South Power Station by the end of this month

Conrad Mwanawashe Business Reporter
POWER utility Zesa Holdings is owed more than $300 million by domestic consumers, forcing the company to engage banks to securitise half of the debt in a bid to raise cash for capital projects.
ZESA group chief executive officer, Engineer Josh Chifamba, told the portfolio committee on Mines and Energy that negotiations with banks to securitise the debt are at

an advanced stage.
He appealed to parliament to assist in the recovery of the money saying the debt is affecting the utility’s cash flows.
“The biggest challenge we have at the moment is the issue of debtors. Vanhu havasi kubhadhara.

This is a challenge not only to Zesa but for the energy sector. I would obviously implore yourselves to assist us in that regard that people be encouraged to pay their bills,” said Eng Chifamba.

Last year Zesa wrote off about $170 million debt made up of $80 million owed by farmers and the difference owed by domestic consumers. Farmers now owe the utility $70 million.

Eng Chifamba said about 429 000 pre-paid metres have been installed and this will help the utility realise more revenue. Zesa transfers 25 percent of payments by defaulters towards liquidating the debt. The power utility is “way below critical mass” faced by high rates of defaulters, old generation, transmission and distribution systems.

“A lot of power stations do not have standby capacity in them and we are literally standing on one leg, which is very dangerous. We are way below the critical mass that we would require to be able to say that we have a healthy transmission system,” said Eng Chifamba. He said by the end of this month Zesa will be able to draw down on the loan from China Eximbank for the expansion of Kariba South Power Station.

China Eximbank will fund 85 percent of the $700 million required for the expansion project. The expansion project will add 300MW to the national grid. Hwange Thermal Station units 7 and 8 are also being rehabilitated to add 600MW to the grid.

“We have been in the market for funds and by the end of this month we will be able to draw down the funds that the Government signed with China Eximbank. The contractor is on sight and we are very certain that this project is going to come to fruition,” he said.

Zimbabwe is faced with power shortages as it is currently able to generate an average of 1 300MW from a generation capacity of 2100MW.
Eng Chifamba said old equipment is reducing efficiency by causing constant breakdowns. He said currently the utility faces power shortfalls of between 600MW and 800MW.

“The situation is made worse by the fact that we do not have enough by way of operation assets on the generation side of our business to be able to meet demand,” said Eng Chifamba.

“We are getting at best 1300MW and this is mainly as a result of the fact that the plant is old.
“The youngest power station we have in the fleet is Hwange Power station which is 30 years old now.

“Some of the oldest power stations we have such as the old thermal power stations in Harare, Gweru, Munyati were commissioned in 1940s so that’s how old they are. In normal situations those power stations would have been decommissioned. We have not been investing in power stations for the last 30 years,” said Eng Chifamba.

He said the reason for failing to build power stations included that the projects were not bankable due to the low electricity tariffs. “In the last 10 years the projects have not been bankable because of the sanctions imposed on Zimbabwe.”

Zesa secured a $29 million facility from India, $40 million from Namibia and $69 million from the Government to rehabilitate power stations.
The Indian facility will go towards the construction of the pipeline which supplies water to Hwange.

Eng Chifamba said Batoka Gorge Power Station is expected to be commissioned in 2022. Currently, the company is carrying out feasibility and environmental impact assessment plans on the project.