Zesa, Zesco stitch power deal

POWER utility Zesa Holdings is in discussions with its Zambian counterpart, Zesco for importation of 100 megawatts of electricity to supplement local production, NewsDay reported

According to Zesco board chairman Vickson Ncube, for Zesa to enjoy the facility, it has to pay monthly deposits of US$6,3 million.

"As Zesco, we have been on the path of strategic planning and strategic engagements since the change of government. This has seen us having discussions with current clients and potential clients both in Zambia and abroad," Ncube said on Tuesday, commenting on the Zesco bulk supply agreement with Copperbelt Energy Corporation (CEC).

"On the selling side, there are advanced discussions with Zesa for exporting 100MW to Zimbabwe premised on Zimbabwe making pre-payments for the 100MW from Kafue Gorge Lower.

"Preliminary discussions arrived at Zesa having to pay monthly deposits of US$6,3 million to enjoy the facility. On the purchasing side, we have since successfully renegotiated our debts with independent power producers who supply us with power such as Maamba Collieries Limited," he said.

Zesco Limited successfully signed a 13-year bulk supply agreement with the CEC effective April 1, 2022. The agreement is worth US$1,9 billion. Zesa extended a plea for help to big miners by constituting a group called the Energy Intensive Users Group to provide off-take guarantees in hard currency for joint access to power.

The entities will be able to import power upon approval from the Zimbabwe Energy Regulatory Authority as prescribed in the Electricity Act.

In the AG's 2020 report For Appropriation Accounts Finance Accounts Revenue Statements and Fund Account, Zesa had foreign loans of US$1,1 billion in the form of interest on outstanding loans advanced to the power utility by the government.

The loans were for refurbishing substations, power station upgrading and construction of substations. In its 2019 State Enterprises and Parastatals report, following the reintroduction of the Zimbabwean dollar, Zimbabwe's Auditor-General found that Zesa's current liabilities exceeded its current assets by $3,2 billion.

This was from the 2018 comparative of $1,5 billion (US$10,5 million). For the year 2019, the group also posted an operating loss before tax of $2,3 billion (US$16,1 million), meaning that over the past few years the company has been struggling to stay afloat.

Further, Zesa is owed over $15 billion by consumers in both the private sector and government for non-payment for electricity supply. The Reserve Bank of Zimbabwe has, however, given approval for the State-owned power utility to start charging exporters in foreign currency.

Through Statutory Instrument 131 of 2022 Zesa can now bill exporters of goods and services in US dollars, euros or any other foreign currencies. Exporters  affected by the new regulations are those that export on average 80% or more per quarter of total output of goods and services produced or provided in Zimbabwe.

However, Zesa cannot bill exporters more than 35% of the electricity supplied to the partial exporter with the balance settled in the Zimbabwean dollar at the prevailing interbank rate published by the RBZ on the date of payment.

Zimbabwe is currently grappling with frequent power cuts, which have further burdened its fragile economy.