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Zimbabwe Business Queries Power Deal, Demands Transparency

HARARE– Zimbabwe’s government must make full disclosures of a power deal inked between ailing State power giant ZESA Holdings and HCB of Mozambique recently to update the public about additional debts the country is taking up through the transaction, according to Zimbabwe National Chamber of Commerce (ZNCC).

President Emmerson Mnangagwa’s government signed a deal to import an additional 100 megawatt (MW) from Mozambique from October 1, in a development many see as key to ending 12 months of protracted rolling blackouts that have grounded industrial production.

In a document submitted to Finance minister Mthuli Ncube by ZNCC chief executive officer, Christopher Mugaga, the chamber warned against the dangers of keeping the public in the dark regarding key national transactions.

It called upon the treasury chief to adhere to the tenants of transparency in public administration.

ZNCC is concerned that debt ridden Zimbabwe has been paying almost $1 million South African energy giant, Eskom for legacy debt accumulated over years of power exports to Harare.

And adding additional costs to the power bill could see government diverting resources out of other critical services to buy power.

“On the energy crisis, we want to compliment government for negotiating 100MW from HCB of Mozambique a fortnight ago but we would want to know the terms of the negotiation,” ZNCC said in the paper, a submission to the 2020 national budget formulation.

“At what cost to the Zimbabwe government (is the Mozambique power deal) given that we are already paying almost $900 000 weekly to Eskom towards debt repayment,” the paper said.

In the past, the two power firms, owed about $70 million in debts in May, have stopped power exports to Zimbabwe due to late payments.

Exports to Harare have only been constant after diplomatic engagements involving Harare and Pretoria, and Harare and Maputo.

ZNCC said the power crisis had inflicted significant damage to business, with the tourism sector among the hardest hit.

It said ZESA Holdings, much switch off firms and individuals that have accumulated huge debts but have failed to come up with credible payment plans.

“Companies are currently running production on generators – nine hours on a daily basis (others more than nine hours a day) which translates to 150 litres per day, 750 litres per week and 3 165 litres of diesel per month,” said ZNCC.

“To put it in monetary value, running a generator costs of about ZWL47 475 per month. Production has been significantly affected due to unavailability of fuel and electricity (companies are losing business). This has implications on the cost of production and pricing 

average capacity utilisation has dwindled to almost 25 percent annualised with the agriculture and manufacturing sectors even recording utilisation levels of 15 percent. For service industries, especially hospitality, the impact has been on the cost build-up since you can’t scale down capacity utilisation. The tourism industry is losing between US$80 million and US$100 million weekly either due to cancelled business or power costs,” noted ZNCC.

It said it was important for government to improve on fuel and electricity availability – stable prices, availability are key for planning purposes,” the lobby said.