Breaking the Zesa monopoly…Paradigm shift needed to end electricity shortages

24 May, 2015 - 00:05 0 Views
Breaking the Zesa monopoly…Paradigm shift needed to end electricity shortages

The Sunday Mail

With Zesa still the only licensee in transmission and distribution, observers say the sector is still very much monopolised
Zimbabwe Electricity Supply Authority workers working on a new electricity line to Chitekete business centre last week - Picture by Kudakwashe Hunda

Zimbabwe Electricity Supply Authority workers working on a new electricity line to Chitekete business centre last week – Picture by Kudakwashe Hunda

News that load-shedding schedule being implemented by Zesa countrywide is a result of recurrent loss of power generation at its “obsolete” plants highlights the need for a paradigm shift in the energy sector, analysts say.

Consumers have had to endure power blackouts lasting up to 16 hours day for the past two weeks due to faults at Hwange Power Station, coupled with instability in the Southern Africa Power Pool.

Experts say the current electricity regulatory structure impedes full participation of independent power producers (IPPs) and “protects Zesa’s monopoly”.

This situation reduces retail competition which in turn affects the quality of service provided by the utility. With Zesa facing a myriad of problems such as obsolete equipment, lack of operating capital and huge debt overhang, IPPs are viewed as the most practical and cheapest way of addressing the national power deficit in the short-term.

IPPs in Zimbabwe reportedly have potential to generate up to 5 000MW.

The idea goes hand-in-glove with suggestions to end Zesa’s monopoly and allow private players to retail electricity that they generate and transmit.

Just across the border, there are growing calls to “partially” privatise Zesa’s South African counterpart, Eskom.

“Zesa have their own shortcomings and it is very easy to put all the blame on them, but doing so is not going to help our situation if that is all we are going to do as a country,” said an engineering expert at University of Zimbabwe.

“The idea is for us as a nation to concentrate all our faculties on improving power generation. But the problems we are facing need us to have wholesome reforms in the way we manage those who want to come on board as alternate power producers.

“We have a very huge potential in IPPs, those in renewable energy included. They can reduce load on the national grid by servicing some of Zesa’s customers, but they are being prevented by the current regulatory structure.”

The lecturer believes the Zimbabwe Energy Regulatory Authority should liberalise the energy sector as well as employing policies which promote the use of alternative energy sources such as solar energy, biogas and LP gas.

However, Zera chief executive officer Engineer Gloria Magombo says Zesa’s monopoly was long broken by the licensing 19 IPPs.

Four of those IPPs are contributing to the national grid.

“Of these, four are generating an average of 21MW and feeding into the grid. These are Nyangani Renewable Energy’s Nyamingura (1,1MW), Duru (2,2MW), Pungwe A (2,7 MW) and Pungwe B (15MW),” she said.

“However, due to the size of the network, the Zimbabwe Electricity Transmission and Distribution Company owned by Zesa still has monopoly of the transmission and distribution network, but Zimbabwe Power Company no longer has monopoly of generating power but remain as a strategic unit.”

Eng Magombo rejected the idea of privatising Zesa.

“It is critical to note that Zesa’s infrastructure is old as it was built in the late 1950s and its latest plant, at Hwange Power Station, was commissioned in 1987,” she said.

“But with continuous and sustained refurbishment, rehabilitation, maintenance and re-rating, the infrastructure can adequately serve the power needs.”

With Zesa still the only licensee in transmission and distribution, observers say the sector is still very much monopolised.

IPPs are prohibited from directly transmitting power to customers and are obliged to sell their electricity to Zesa.

Nonetheless Part 5 (1) of the Electricity Act provides that “a private undertaker who obtains the prior consent of the Authority and the Minister may transmit, distribute or supply electricity to any other person, in accordance with an agreement of supply between the private undertaker and that other person”.

Energy expert Mr Kotsai Makamure said it is possible at law to totally break Zesa’s monopoly, but this would be a long process.

“Whilst in a nutshell it is legally possible for Zera to license players in generation, transmission and retail distribution, Zesa will continue to be the base load generator, the trunk transmission operator and the primary licensed retail distributor.”

Zesa, according to its website, is producing around 800MW against demand of about 2 200MW.

According to officials, power generating plants are well past their best before date and the infrastructure is prone to breakdowns.

Financial challenges make it difficult for Zesa to swiftly attend to faults. Zesa is owed around US$700 million by customers at a time it is losing about US$20 million per month through non-technical leakages.

Government has began projects such as Kariba South expansion to increase power generation.

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