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Business Reporter

COAL miner, Makomo Resources’ operation have been hit by a major setback after the Zimbabwe Revenue Authority garnished its bank accounts over tax liabilities.The garnishment for an undisclosed amount against the company’s bank accounts was issued last Friday, a development “likely to cripple” operations, a source who requested not to be named said. No comment could be immediately obtained from Zimra.

Makomo is the largest coal supplier to Zimbabwe Power Company, which operates Hwange Thermal Power Station and small thermals — Munyati, Bulawayo and Harare.

The thermal power stations account for nearly 50 percent of locally produced electricity.

“They tried to negotiate with Zimra but unfortunately, they issued an order,” said the source.

“Makomo needs some consumables such as explosives and fuel and now that the accounts have been garnished, they might be forced to temporarily halt operations.”

Makomo director Ray Mutokonyi could neither confirm nor deny the latest development, although the source insisted negotiations were underway to uplift the garnish.

Our correspondent in Hwange, who visited the mine said there were production disturbances early this week, but could not confirm whether they were related to the Zimra order.

The source said Makomo Resources was facing serious cash flow challenges mainly due to huge outstanding payments from the ZPC, its biggest customer.

No comment could be obtained from the ZPC by the time of going to print last Friday.But commenting on a similar issue in June this year, Zesa spokesperson Mr Fullard Gwasira said the unavailability of the 2016 tariff upward adjustment has significantly contributed to cash flow challenges and a large debtors book of about $1,1 billion

Zesa has since increased recovery rate to 50 percent from 40 percent of electricity purchases on consumers with pre-paid metres.This means Zesa will take 50 percent of every purchase to offset debts accumulated under the old conventional billing system.

Zimbabwe is also importing power from Mozambique and South Africa to cover for the shortfalls. However, foreign currency challenges have seen Zesa’s debt accumulating.

There are fears that Mozambique and South Africa could cut supplies over the debts.