Eskom seeks power import guarantee

Source: Eskom seeks power import guarantee | The Herald September 29, 2016

Business Reporter

SOUTH Africa’s power utility Eskom is said to be seeking a Government guarantee of R500 million to back electricity imports by Zimbabwe. Well placed sources told The Herald Business that the request for a guarantee follows failure by the local power utility to pay for imports from South Africa, and this could see Zesa start to ration electricity supplies.Zesa is facing cash flow challenges mainly as a result of a huge debtors book, currently at $1,1 billion. This has also been worsened by the unavailability of the 2016 tariff upward adjustment.

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.

“They (Eskom) are still willing to do business with Zesa but they have requested for a Government guarantee and we are looking at the issue,” a source in the Ministry of Finance and Economic Development said.

It could however, not be ascertained how much Zesa owes Eskom, but another source said the amount could be in the “region of $12 million.”

No official comment could be obtained from Zesa and the ministry by the time of going to print. Zesa imports up to 350 megawatts of power from South Africa and Mozambique.

Since the beginning of the year, Zimbabwe’s power situation has significantly improved due to a number of initiatives put in place by Zesa Holdings, including imports. But some analysts have warned that this is not sustainable at the current electricity tariff.

The power cuts had been so severe with many residents suffering up to 18-hour blackouts. The rolling cuts also affected businesses, particularly mining companies and the manufacturing industry.

“The challenge is Eskom may end up cutting supplies if the Government fails to raise the guarantee,” said Fredrick Chinwa, an economic analyst with a local research firm.