Pay your debt or else!!! Zimbabwe’s Power Utility Clears Hydro Cahora Bassa Debt: US$30 million

Electric-Bill_1 eletric_bill

(2015-07-16) Zimbabwe’s integrated power generation and distribution company, ZESA Holdings, has paid off its overdue debt to Mozambique’s Hydro Cahora Bassa (HCB).

The debt stood at nearly US$30 million late last year, although it had initially been at about US$100 million.

Julian Chinembiri, the managing director of the Zimbabwe Electricity Transmission and Distribution Company, a unit of ZESA Holdings, told the Financial Gazette on the sidelines of a workshop on vandalism and theft of electricity infrastructure in the capital last week that the debt had been cleared.

“We have a firm agreement with HCB and actually, we are current, we don’t owe them anything now,” said Chinembiri.

It is understood that ZESA was forced to pay off the debt after it realised HCB could cut supplies anytime, a move which would have significantly disrupted the country’s economic activities and possibly worsened a dire economic crisis.

Now that the local power utility has paid off its debt, it means continued imports to achieve security of electricity supply in line with the existing arrangements under a power purchase agreement with HCB are guaranteed.

The power utility, which has been struggling to generate adequate electricity for the country due to poor domestic power generation, risked losing electricity imports from its major electricity supplier.

However, last year ZESA inked a firm agreement with the Mozambican power utility to supply 100 megawatts (MW) of electricity into the country on a firm contract basis to augment low local generation capacity, which underlined the country’s vulnerability.

A firm contract refers to guaranteed electricity supplies at a given time which must be generated to meet contractual obligations. ZESA has also taken steps to get other regional power utilities to supply the country with electricity on non-firm agreements.

These include Zambia Electricity Supply Corporation and Eskom of South Africa.

Zimbabwe has been experiencing massive load-shedding across the country owing to low power generation from the country’s five power stations.

The Zimbabwe Power Company (ZPC), another subsidiary of ZESA Holdings in charge of power generation, operates five power stations namely Hwange, Kariba, Munyati, Harare and Bulawayo.

More than a decade of economic collapse left the power stations in disrepair, with generators operating well below their capacity.

The country is currently generating about 1 400 megawatts (MW) of power against a national demand of about 2 200MW of electricity at peak periods.

In order to mitigate this deficit, ZESA has relied on electricity imports from regional utilities to supplement local supplies that are failing to meet demand.

Realising that the country was not getting enough imports to augment supplies, the power utility resorted to increased load-shedding.

However, government through ZPC is working to close the electricity deficit in the country through several projects that include the expansion projects at Kariba South Power Station and Hwange Power Station.

Source: All Africa

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