News / National
Zesa to get bridging finance from govt
27 Jul 2019 at 16:28hrs | Views
THE government is considering providing bridging finance to struggling Zesa Holdings in order to alleviate the current power crisis in the country , a government official has disclosed.
Zesa Holdings is saddled with legacy debts that run into several hundreds of millions of dollars, with the power utility owing regional power houses Eskom of South Africa and HCB of Mozambique in excess of US$80 million.
Government recently paid US$10 million to Eskom in the hope that the payment would unlock more energy towards Zimbabwe at a time the country is faced with biting power shortages.
Eskom, however, is faced with its own set of challenges in delivering power to South Africans- challenges which could see it reduce power to Zimbabwe in the event that the purported deal talks between the two governments fall through.
Speaking at the Confederation of Zimbabwe Industries annual congress in Victoria Falls on Thursday, Energy and Power Development deputy minister Magna Mudyiwa said the funding would help Zesa Holdings re-focus its operations.
"The ministry is seeking an interim bridging funding package to rescue Zesa Holdings from liquidity, while a tariff review is being considered," she said.
Mudyiwa added: "The current electricity tariff has gone below US1 cent per kilowatt-hour, and this is not sustainable. It is a situation that calls for an urgent review of the tariff regime that we have in place so that we can bring the tariff structure to par with that of other regional players," she added.
The challenge, Mudyiwa added, had been created by some consumers that had refused or neglected to pay cost-effective tariffs as demanded by Zesa Holdings.
"I, therefore, encourage the industry and private sector to consider paying cost-reflective tariffs. Profits are good, but for the utility to remain operational, it has to service its debts, procure resources and maintain equipment.
"I dream of a day that industry and commercial farms pay upfront for electricity they use. Pre-payment will assist Zesa Holdings to recover the current debt and avoid it altogether in the future," Mudyiwa said.
Energy minister Fortune Chasi has been leading a crusade in recent weeks, where he has been challenging business and other electricity consumers to pay what they owe to Zesa Holdings. This follows government's settling of a $20 million debt it owed to the power utility.
"ZETDC requires forex to prefund and bid for electricity import through the Day-Ahead-Market (DAM). DAM power is usually cheaper and guaranteed. We still have an electricity debt of US$80 million that we owe to HCB of Mozambique and Eskom of South Africa. Our hope is for successful negotiations (between Zimbabwe and South African governments) over payment plans to settle the debt. We are expected to yield between 400Mw and 600Mw of power from the discussions with Eskom," Mudyiwa added.
Zesa Holdings is saddled with legacy debts that run into several hundreds of millions of dollars, with the power utility owing regional power houses Eskom of South Africa and HCB of Mozambique in excess of US$80 million.
Government recently paid US$10 million to Eskom in the hope that the payment would unlock more energy towards Zimbabwe at a time the country is faced with biting power shortages.
Eskom, however, is faced with its own set of challenges in delivering power to South Africans- challenges which could see it reduce power to Zimbabwe in the event that the purported deal talks between the two governments fall through.
Speaking at the Confederation of Zimbabwe Industries annual congress in Victoria Falls on Thursday, Energy and Power Development deputy minister Magna Mudyiwa said the funding would help Zesa Holdings re-focus its operations.
"The ministry is seeking an interim bridging funding package to rescue Zesa Holdings from liquidity, while a tariff review is being considered," she said.
The challenge, Mudyiwa added, had been created by some consumers that had refused or neglected to pay cost-effective tariffs as demanded by Zesa Holdings.
"I, therefore, encourage the industry and private sector to consider paying cost-reflective tariffs. Profits are good, but for the utility to remain operational, it has to service its debts, procure resources and maintain equipment.
"I dream of a day that industry and commercial farms pay upfront for electricity they use. Pre-payment will assist Zesa Holdings to recover the current debt and avoid it altogether in the future," Mudyiwa said.
Energy minister Fortune Chasi has been leading a crusade in recent weeks, where he has been challenging business and other electricity consumers to pay what they owe to Zesa Holdings. This follows government's settling of a $20 million debt it owed to the power utility.
"ZETDC requires forex to prefund and bid for electricity import through the Day-Ahead-Market (DAM). DAM power is usually cheaper and guaranteed. We still have an electricity debt of US$80 million that we owe to HCB of Mozambique and Eskom of South Africa. Our hope is for successful negotiations (between Zimbabwe and South African governments) over payment plans to settle the debt. We are expected to yield between 400Mw and 600Mw of power from the discussions with Eskom," Mudyiwa added.
Source - newsday
