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Zesa seeks to settle loans in ZiG

by Staff reporter
13 Jun 2024 at 01:51hrs | Views
Zesa Holdings is implementing cost-containment measures to drive revenue and pay off its significant loans. With successful expansion projects at Kariba Hydro Power Station and Hwange's units 7 and 8, Zesa is servicing loans of US$319 million and around US$1 billion from China Exim Bank.

To manage costs, Zesa has developed a strategy to save money and meet operational requirements using the Zimbabwe Gold (ZiG) currency. They are negotiating with suppliers to accept partial payments in ZiG or a combination of ZiG and US dollars. Zesa is also focused on debt recovery, collecting ZiG400 million and US$55 million monthly, though it needs more to meet its US dollar obligations, including importing power.

Zesa is engaging with China Exim Bank and Sinohydro Corporation to negotiate penalties due to delays caused by monetary policy changes and restore its Escrow accounts. Elias Chikwenhere, Zesa's group financial controller, stated that the company aims to cut costs to remain operational. Zesa's monthly requirement for Hwange units 7 and 8 is US$36 million, which they aim to partially pay in ZiG.

The company's revenue is insufficient to cover all its obligations, including financing operations, loan repayments, spare parts purchases, and power imports. Zesa collects around US$51 million monthly, but its commitments exceed this amount. They also need US$5 million monthly for importing spares.

Zesa plans to leverage the strengthening local currency to pay for certain services in ZiG and aims to increase payments from new mining firms to meet its obligations. Identifying specific customers to pay directly into Escrow accounts is also part of the strategy to resolve payment challenges.

Source - The Chronicle
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