Industry power demand set to increase 30pc

Source: Industry power demand set to increase 30pc | The Herald January 26, 2017

Golden Sibanda Senior Business Reporter —
INDUSTRY says its demand for power could increase by 30 to 50 percent in the near term as electricity use grows driven by support measures Government has taken to support the sector.

This comes after the Confederation of Zimbabwe reached an agreement with Zesa Holdings for advance payment for electricity to help the power utility in securing power imports.

According to CZI, Zesa will give 10 percent per annum price cuts for advance payments from industry, which is effectively a discount of 10 percent for the annual upfront payments for power.

CZI president Busisa Moyo said that the manufacturing industry accounts for about 30 percent of the power consumed in Zimbabwe, which is 500 megawatts to 600MW.

“The demand is growing as Government supports local manufacturing and re-industrialisation. This demand is expected to grow by 30-50 percent as companies increase capacity and new factories start producing from within Zimbabwe,” said Mr Moyo in response to e-mailed questions.

Government, through fiscal measures extended by the Ministry of Finance and Economic Development has been supporting the manufacturing industry through measures that include import restrictions and import rebates to grow production.

Some of the measures include Statutory Instrument 64 of 2016, which removed 41 products from the General Import Licence, largely credited with helping to raise industrial capacity from an average of 34 percent in 2015 to 47 percent by end of 2016, according an industry survey of last year.

Mr Moyo said Zesa is getting assistance from industry under an arrangement where CZI members and meter-holders pay in advance for electricity in exchange for a discounted power tariff.

“It is not the intention of members to import directly. Zesa is approaching members individually on the back of our endorsement of the proposal to the apex body, CZI,” Mr Moyo said.

Mining companies have also proposed a similar arrangement where they would pay for electricity in advance for guaranteed supply and to avoid interruptions to production.

Expectations are that the power utility will continue to import from its traditional sources such as Mozambique and South Africa, as well as others who have excess power or keen to export to earn foreign currency for their power authorities.

Zimbabwe imports power from regional utilities to augment limited supply from its power stations due to constrained generation, with the two largest power stations still constrained on output. Kariba South is still rationed and Hwange Thermal is still under renovation. New stations planned for the 1990s and 2000s were not built.

However, Government has awarded contracts for expansion of generation capacity of the country’s biggest power plants, Kariba South Power Station and Hwange Power Station. Kariba will add 300MW while Hwange will add 600MW.

Zimbabwe will jointly develop the Batoka hydro power project with Zambia, which will generate over 800MW on each side.

Studies suggest that the site has potential for more.