Source: Eskom relaxes Zesa power import terms | The Herald January 9, 2017
Golden Sibanda: Senior Business Reporter
SOUTH African power utility, Eskom has relaxed its position regarding earlier demands for Zesa Holdings to pay for power imports in advance. The power utility imports 50 megawatts from its South African counterpart during peak periods of demand and up to 300MW during off peak periods.This is because demand for power outstrips supply in Zimbabwe owing to limited generation, with most power plants having lived beyond their lifespan. It is understood Eskom, although it sometimes faces severe supply deficits, exports power to Zimbabwe to get hard currency at a time the rand is weak.
Eskom demanded that Zesa pays for power imports ahead of supply after the power utility struggled to settle bills for the electricity supplies from South Africa. As such, Zesa was paying upfront an average of $6,5 million per month to Eskom and broke the monthly bill into weekly instalments due to cash constraints.
The Herald Business understands that Zesa is now making weekly payments of about $1,7 million whenever it has the finances to prepay for the imports. Zimbabwe’s power utility is facing cash flow challenges due to a sub-economic tariff and a enormous debtor’s book for power already consumed.
Further, Zimbabwean entities have faced serious difficulty in making foreign payments due to depleted nostro account balances on account of low exports. But secretary for energy, Patson Mbiriri, said in an interview yesterday that Eskom “is not insisting on its pound of flesh” regarding advance payment.
“To the extent that foreign currency is available, we are importing on the basis of prepayment arrangement, but Eskom has not been insisting on its pound of flesh. South Africa is not insisting (upfront payment) on it at every turn,” he said.
Zesa also imports power from regional utilities including Hydro Cahorra Bassa and Lusemfwa of Zambia to cover local supply gaps due to limited capacity.
Zimbabwe requires an average of 1 400MW against local generation of 1 000MW. Only Kariba South power station can generate power at installed capacity of 750MW, but output is currently regulated due to low lake water levels.
While Hwange Power Station had installed capacity to produce 920MW, it can only manage under 500MW as the station is now old while other units are unit. The country’s three thermals namely Bulawayo, Munyati and Harare can only produce at a fraction of their design capacity and are also quite aged.
Zesa Holdings recently asked industry to pay for power in advance to enable it to mobilise resources it required to clear arrears for power imports.
The power utility promised uninterrupted power supply to industry, outside of emergencies beyond its control. Shortage of power may however soon be a thing of the past with new projects set to connect to the grid. Several other public and private sector led power projects are at various stages across the country and these include solar and hydro power initiatives.