Zim life to get worse, darker

via Zim life to get worse, darker – DailyNews Live 5 September 2015 by Ndakaziva Majaka

HARARE – The gloom enveloping Zimbabwe as a result of the country’s decades-long political and economic crises is set to worsen following an increase in power outages — with industrialists and economists warning yesterday that this would cripple Harare’s already moribund economy further and lead to more company closures and job redundancies.

This comes after national power utility Zesa Holdings announced this week that Hwange Thermal Power Station would be undergoing maintenance until October 7, while power generation at the key Kariba Hydro Station will fall by more than 36 percent — to a grossly inadequate 475 megawatts (MW) — due to depleted water levels in the drying Kariba Dam.

Zimbabwe, which requires up to 2 200 MW of electricity per day, is currently producing about 1 095 MW — which is half of the national needs — resulting in many parts of the country spending up to 16 hours everyday without electricity, and crippling many industries that require power to keep production going.

Kariba and Hwange account for 95 percent of Zimbabwe’s daily power output, and the shutdown at the latter plant means that the country will produce about a third of its energy demand which peaks at 2 200 MW — worsening the dire situation in the country which is already in the throes of a debilitating economic crisis that is seeing many survive on street vending.

Confederation of Zimbabwe Industries (CZI) president Busisa Moyo told the Daily News yesterday that the damage that the reduced power supply was going to have on business “was nothing short of disastrous”.

“Firstly, in the light of these recent developments, our recommendation as CZI is that government must prioritise the productive sectors. It is not that we want to be protected as much as it is an issue revolving around the fact that in the first half of this year, industry recorded a 20 percent dip in volumes and revenue. So, this cut, during the last three months of the year, which are traditionally the most productive by the way, will have dire consequences,” Moyo said.

“The damage is going to be beyond epic proportions, so the little power that the country will have left must be channelled towards industry. Miners, for example, desperately need this power, as do manufactures and farmers.

“Government must ring-fence business if these sectors are to survive. In any case our labour costs are fixed, so power cannot be taken out of the equation as companies will struggle to stay afloat, eventually leading to closures,” Moyo added.

The CZI president, who is also the chief executive of United Refineries, said a significant chunk of business was traditionally generated during the last quarter of the year, and the government had to be careful that it avoided an imminent and complete economic collapse.

Prominent economist, Tony Hawkins, also warned that the slump in power generation was going to affect all of the country’s economic projections.

“The worst case scenario is that we are going to have a huge problem where capacity utilisation is concerned, as power is essential for all sectors, especially mining, which the economy is being anchored on.

“After this, all growth forecasts are going to be very ambitious and at this rate government is going to have to start manufacturing figures as the economy will soon start trending in the negatives,” Hawkins said.

Zimbabwe National Chamber of Commerce (ZNCC) chief executive Takura Mugaga said his organisation was “seriously concerned” about the energy crisis.

“It is certainly going to be a long winter for business as the June judgment on the labour law and subsequent labour amendments, coupled with the depleted energy generation, are going to pause serious viability challenges.

“In fact, there is no way we will expect capacity utilisation to go up in this harsh environment. What is happening at Kariba clearly exposes a lack of energy on the part of government since the crisis appears to be prolonged,” he said.

Mugaga also said the development highlighted “a flaw” in the kind of investors the country was attracting.

“This may also be evidence that we are attracting wrong investors in the country as they spend time in the wrong sectors when the projects which need Foreign Direct Investment are deserted,” he said.

Another analyst, Issis Mwale, said the government had to make the right call and prioritise the “right sectors or risk total economic collapse” at this time.

“While this is very unfortunate, it is up to the relevant authorities to make the right call and make sure the productive sectors get power.

“If they do not do this, the economy is going to come to a screeching halt as it has steadily been hurtling towards this for a very long time.

“All projections are also going to be dented as economic growth figures have already been revised downwards. At this rate, the figures are going to be even lower,” Mwale said.

On the back of the power crisis, Zimbabwe’s largest platinum producer, Zimplats, recently concluded a power import deal with Mozambique’s Hydro Cahora Bassa (HCB) power utility, which is expected to increase the miner’s production and boost beneficiation work at the group’s base metal refinery.

According to reports, this deal will see the platinum miner importing about 80MW of electricity directly from Mozambique. Zimplats already has a contract running that allows it to import about 75MW of electricity through the Zesa grid from HCB, which expires in two years time.

The power crisis is also coming at a time that economists have warned that the country has hit the depths of humanitarian and economic despair that were last experienced in 2008, when Zimbabwe’s seemingly unending political crisis precipitated an economic meltdown of monumental proportions which culminated in the death of the Zimbabwe dollar.

In addition, more and more observers are predicting the imminent explosion of social unrest and debilitating mass actions in the country, with the latest think tank to envisage such doom and gloom being NKC African Economics (NKC) — a unit of the world famous Oxford Economics of the UK.