“Winter is coming”, promised power outages threaten output

Harare – Zimbabwe is bracing for crippling power supply outages which is likely to be the worst in a decade. The major reason put up as a possible causative for the looming load shedding is reduced power generation at Zimbabwe’s domestic power stations.

Already Zimbabwe’s power generation lags power demand at 1110 megawatts against 1500 megawatts leaving a deficit of 400 megawatts.

The difference is satisfied by imports from mainly Cabora Bassa in Mozambique and Eskom in South Africa. The dearth in local supplies is mainly a result of low dam levels following the 2018 low rainfall levels, which implication lowered water generated power production.

Over 90% of Zimbabwe’s energy is generated from water and coal. A marginal growth has been reported in solar powered energy in recent years.

The alternative of importation brings a new conundrum to the power matrix since the liberalization of the exchange rate. Given the flat charges in RTGS$ which have not moved in line with the exchange rate, ZESA has since been counting losses.

Earlier ZESA’s Corporate Commercial Services Manager Richard Mariwa told a meeting in Harare that the recent changes in the monetary policy have not been factored in the computation of a viable pricing mechanism for the state power distributor.

He said if the prices are not adjusted given the prevailing exchange rate, ZESA’s tariffs will not only be sub-economic but ridiculous and will result in ZESA going bankrupt in the not so distant future.

Interestingly business in its CZI manufacturing sector survey has perennially lamented high power tariffs as the major driver of low production and less competitive product offering relative to the region.

Although most entities have adjusted prices to factor inflation, power tariff adjustments and electricity substitution will come at a huge cost to the economy.

Not only will it attract further commodity price adjustments, but rather drastically reduce national output as industry adjust to the power outages.

Most of the productive sector relies on power for production and this includes in agriculture, mining and manufacturing. Agriculture and mining are the key drivers of Zimbabwe’s economy.

According to ZESA considerable generation capacity has been lost due to dwindling water levels at the giant Kariba Hydro-Power Station and ageing equipment at the four main thermal stations.

ZESA says Hwange, Bulawayo and Harare thermal power plants are currently not generating much due to “old age.” While low maintenance is prevalent at the power stations, the Zambezi River Authority (ZRA) has reduced water allocation to ZPC from 19 billion cubic metres to 16 billion cubic metres for 2019.

This is to enable the plant to be operational until the next rainy season. This is because there was very low rainfall in the 2018-2019 rain season and the water levels at Kariba Dam are now quite low.

Kariba Power Station, which was already operating at half capacity, will reduce generation further to 358 MW from 542 MW.

Kariba has a generating capacity of 1 050 MW after another 300 MW was added in 2017. This has led to the current power cuts in Zimbabwe.

– Equity Axis News

Respect Gwenzi

Respect is the Lead Analyst and Managing Director at Equity Axis. He has 8 years experience in respective fields of finance and media. Particular areas of expertise include Asset Management, Stockbroking and Financial Media. Respect is on a mission to change the course of Financial Media in Africa through digitalization

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