Exporters to pay for power in forex

02 Jun, 2019 - 00:06 0 Views
Exporters to pay for power in forex

The Sunday Mail

Business Reporter

Government is working on a plan that will see exporting companies pay their electricity bills in foreign currency in an effort to ease power shortages that threaten to plunge the nation into darkness and derail economic recovery.

The country is currently going through a damaging load shedding schedule with consumers going for more than 10 hours without power.

Load shedding was introduced last month after the country’s anchor power generator, Kariba Dam, had its capacity cut to just 358MW per day as a result of receding water levels.

In a State of the Energy Sector Ministerial Statement presented in Parliament last week, Energy and Power Development Minister Fortune Chasi, said water levels at Kariba Dam have continued to recede at an alarming level and might result in Kariba failing to produce power.

“As of last week, the dam was 32 percent, and as of Monday (27 May), it had dropped to 29 percent.  So, we can all do the mathematics involved in that to show and understand the problem at hand in terms of reduction of water levels at Kariba.  If that trend continues at that pace, this means that in theory, within 14 weeks, Kariba will not be able to deliver power,” said Minister Chasi.

The situation has also been compounded by the below average performance at Hwange Power Station due “to its obsolete plant long past its life.”

Minister Chasi however, said the ongoing load shedding is not a sustainable method to deal with the current challenges.

“Load shedding is not sustainable for exporters that are earning the country’s much needed foreign currency and contributing to economic growth of the country. For every unit of unsaved power arising from load shedding of productive sectors, the country loses, according to research, US$3,20 in its Gross Domestic Product,” said Minister Chasi.

As a result, his ministry is working on remedial measures that will see the country turn to neighbouring South Africa and Mozambique for power supplies.

Minister Chasi said the power imports of up to 400 megawatts can be unlocked by a bankable plan to both ESKOM of South Africa and HCB of Mozambique.

“The imports would securitise power supply for the exporting mines and industries and release power for the other customers, some of whom are pre-paying.

“It is proposed that exporters pay their electricity bills in foreign currency in proportion to their foreign currency retention percentage,” he said.

This arrangement is estimated to raise US$11 million against an estimated bill of US$14 million per month. Minister Chasi said the foreign currency generated would go towards meeting the current power import bills plus a portion for the amortisation of arrears.

“A statutory instrument to this effect is being considered.”

ZESA can’t cope

Meanwhile, Minister Chasi said power utility ZESA is currently struggling to fully fund operations.

He said the severe cash flow crisis being experienced would see operations grinding to a halt in the “not too distant future, unless support is rendered as the funding gap increases every month cumulatively, because people “fail of decide not to pay the bill.”

“The price of critical generation consumables has increased by an increase of 250 percent. Coal suppliers at the moment are agitating for a price review,” he said.

An urgent support bail out of RTGS$63 million monthly from Treasury is required to enable ZETDC to continue supplying electricity to the nation and support economic activities.

“This will cover the funding gap created by the absence of a tariff adjustment which recognises the monetary policy and introduction of the interbank market to cover foreign currency purchases.

With the current tariff, ZETDC is collecting between RTGS$60-70 million against a monthly budget of RTGS$130 million to cover the bare essentials.

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