News / National
Zesa fails to settle Eskom debt, massive load shedding feared
23 May 2017 at 06:46hrs | Views
Zimbabwe might experience massive load shedding starting next week if Zesa Holdings fails to settle an outstanding power import bill of $43 million owed to Eskom of South Africa and Hydro Cahora Bassa (HCB) of Mozambique.
Eskom supplies Zimbabwe with 300 megawatts, while HCB chips in with 50 megawatts.
The South African power company has threatened to switch off Zimbabwe if Zesa fails to pay the outstanding amount in eight days.
Zimbabwe consumes about 1 400 megawatts daily against a generating capacity of around 980 megawatts.
Zesa owes the two regional power giants more than $100 million, but the $43 million is emanating from the payment plan the power company has failed to honour due to foreign currency shortages.
Earlier this year Zesa made payment plans with regional power utilities and should have paid $89 million between January and April.
The authority managed to pay off $46 million, leaving a balance of $43 million.
The payment plan included 2016 arrears.
The creditors gave Zesa up to May 31 to clear the arrears in the payment plan, but with only eight days to go, the power utility has not paid anything.
Zesa chief executive Engineer Josh Chifamba, yesterday confirmed they were yet to settle the arrears.
"We are yet to service the debt but we are making frantic efforts to pay and revert to the original payment plan," he said.
"We have been having meetings with the Reserve Bank of Zimbabwe and the Ministry of Finance and Economic Development to find ways of coming out of this (problem). Hopefully, this week something will come up because everyone knows the effects of failing to pay."
Zimbabwe has been enjoying steady power supplies for the past 16 months owing to various initiatives, which included imports.
Major creditors are Eskom, which is overally owed $80 million and Hydro Cahora Bassa of Mozambique ($40 million).
It is understood that HCB officials will be in the country tomorrow "to see how far Zimbabwe has gone towards raising the money it owes them."
Eskom interim group chief executive Mr Matshela Koko, recently wrote to Eng Chifamba indicating that supplies would be cut off with effect from June 1.
He said failure by Zesa to restore the payment plan by end of May would see supplies being curtailed.
"The balance as at end of March 2017 according to the plan, should have been R484 721 980, but the actual balance was R603 176 479, leaving a shortfall of approximately R118 454 499," Mr Koko said.
"I refer to your finance director's request to our Mr Segomoco Scheppers requesting further accommodation by Eskom by allowing Eskom's remedial action as provided for to be delayed to end May 2017. Eskom do hereby confirms acceptance of this request and requires that; the current outstanding debt should not increase and Zesa shall take all steps necessary to ensure the outstanding balance as at 14 April, 2017 is maintained or preferably reduced, Zesa will restore the repayment plan by ensuring that as at end May 2017, the outstanding balance, including all subsequent invoices will be R491 416 426 or less. Kindly confirm Zesa's acceptance of this accommodation being offered by Eskom. Kindly note that no further lenience or accommodation will be made in this regard and Eskom will draw down on the guarantee, raise the appropriate interest charges and curtail supply immediately should the balance not align with this proposal as at 31 May 2017."
To back up power imports, Government recently issued an R500 million ($35 million) guarantee to Eskom and it is that surety that the latter is threatening to call up.
Industrialists and miners yesterday called on monetary authorities to prioritise power provision saying any cut on the supplies would have a devastating effect on industry and winter wheat cropping currently underway.
Chamber of Mines chief executive officer Mr Isaac Kwesu said: "Once they cut off it will be insufficient to meet national demand. If more than 300 megawatts is cut off or reduced it means the authorities have to re-prioritise so that the productive sectors are given importance considering our role in the economy. From the mining industry we are saying whatever situation, give us what is available so that we keep on carrying the economy in terms of adequate foreign exchange. The economy has been improving and it means the monetary authorities should give Zesa a priority the same way Zesa has been prioritising us."
An official from the Confederation of Zimbabwe Industries added: "Respective authorities have to move with speed to ensure the money is availed otherwise we don't want to move one step forward and two steps backwards.
"We have policies put in place to turn around the economy and without power we will be shooting ourselves in the foot. We should not undermine our efforts and reduce the business confidence, which is on the high."
The country's economic blueprint, Zim-Asset, identifies energy as a key enabler under infrastructure and utilities, as well as the value addition and beneficiation initiatives.
This cluster needs massive support and its failure spells doom for the country.
Eskom supplies Zimbabwe with 300 megawatts, while HCB chips in with 50 megawatts.
The South African power company has threatened to switch off Zimbabwe if Zesa fails to pay the outstanding amount in eight days.
Zimbabwe consumes about 1 400 megawatts daily against a generating capacity of around 980 megawatts.
Zesa owes the two regional power giants more than $100 million, but the $43 million is emanating from the payment plan the power company has failed to honour due to foreign currency shortages.
Earlier this year Zesa made payment plans with regional power utilities and should have paid $89 million between January and April.
The authority managed to pay off $46 million, leaving a balance of $43 million.
The payment plan included 2016 arrears.
The creditors gave Zesa up to May 31 to clear the arrears in the payment plan, but with only eight days to go, the power utility has not paid anything.
Zesa chief executive Engineer Josh Chifamba, yesterday confirmed they were yet to settle the arrears.
"We are yet to service the debt but we are making frantic efforts to pay and revert to the original payment plan," he said.
"We have been having meetings with the Reserve Bank of Zimbabwe and the Ministry of Finance and Economic Development to find ways of coming out of this (problem). Hopefully, this week something will come up because everyone knows the effects of failing to pay."
Zimbabwe has been enjoying steady power supplies for the past 16 months owing to various initiatives, which included imports.
Major creditors are Eskom, which is overally owed $80 million and Hydro Cahora Bassa of Mozambique ($40 million).
It is understood that HCB officials will be in the country tomorrow "to see how far Zimbabwe has gone towards raising the money it owes them."
Eskom interim group chief executive Mr Matshela Koko, recently wrote to Eng Chifamba indicating that supplies would be cut off with effect from June 1.
He said failure by Zesa to restore the payment plan by end of May would see supplies being curtailed.
"The balance as at end of March 2017 according to the plan, should have been R484 721 980, but the actual balance was R603 176 479, leaving a shortfall of approximately R118 454 499," Mr Koko said.
"I refer to your finance director's request to our Mr Segomoco Scheppers requesting further accommodation by Eskom by allowing Eskom's remedial action as provided for to be delayed to end May 2017. Eskom do hereby confirms acceptance of this request and requires that; the current outstanding debt should not increase and Zesa shall take all steps necessary to ensure the outstanding balance as at 14 April, 2017 is maintained or preferably reduced, Zesa will restore the repayment plan by ensuring that as at end May 2017, the outstanding balance, including all subsequent invoices will be R491 416 426 or less. Kindly confirm Zesa's acceptance of this accommodation being offered by Eskom. Kindly note that no further lenience or accommodation will be made in this regard and Eskom will draw down on the guarantee, raise the appropriate interest charges and curtail supply immediately should the balance not align with this proposal as at 31 May 2017."
To back up power imports, Government recently issued an R500 million ($35 million) guarantee to Eskom and it is that surety that the latter is threatening to call up.
Industrialists and miners yesterday called on monetary authorities to prioritise power provision saying any cut on the supplies would have a devastating effect on industry and winter wheat cropping currently underway.
Chamber of Mines chief executive officer Mr Isaac Kwesu said: "Once they cut off it will be insufficient to meet national demand. If more than 300 megawatts is cut off or reduced it means the authorities have to re-prioritise so that the productive sectors are given importance considering our role in the economy. From the mining industry we are saying whatever situation, give us what is available so that we keep on carrying the economy in terms of adequate foreign exchange. The economy has been improving and it means the monetary authorities should give Zesa a priority the same way Zesa has been prioritising us."
An official from the Confederation of Zimbabwe Industries added: "Respective authorities have to move with speed to ensure the money is availed otherwise we don't want to move one step forward and two steps backwards.
"We have policies put in place to turn around the economy and without power we will be shooting ourselves in the foot. We should not undermine our efforts and reduce the business confidence, which is on the high."
The country's economic blueprint, Zim-Asset, identifies energy as a key enabler under infrastructure and utilities, as well as the value addition and beneficiation initiatives.
This cluster needs massive support and its failure spells doom for the country.
Source - chronicle
