Hwange Units 7 & 8, well-placed sources said, were constructed on a contract based in US dollars, and private foreign investment was utilised to finance the expansion project.
“The going is rough. ZETDC is purchasing power at a cost of US$0,12 per kilowatt hour and selling it to consumers at an average cost of US$0,10 per kilowatt hour, which is less than the cost of production,” sources told Standardbusiness.
“As we speak, the organisation has accumulated a debt of over US$60 million from the newly commissioned Hwange Unit 7 and 8 plants.”
The two units, with a combined power output of 600MW, cost the country US$1,5 billion to finish. The project was undertaken by Sinohydro Corporation.
The source continued: “Zesa (Zimbabwe Electricity Supply Authority) needs to pay for Hwange 7 & 8 in forex to Sinohydro, the contractor but consumers are paying in local currency. We have unsustainable tariffs and people are not paying, especially the local authorities.
“If the tariff issue is not sorted, relations with the Chinese are going to be affected. So far it’s good and everyone is happy, but if the tariffs issue is not solved, Zesa is going to fail to pay the suppliers.”
The insider said the national power utility used to import up to 200MW from Mozambique, but now is getting about 10MW due to the failure by Zesa to service its debts.
Standardbusiness understands that Zambia power utility Zesco also discontinued the supply of 100MW to Zimbabwe because the contract was not performing well.
“As long as Zesa is not getting the money it needs, it will be in trouble and the whole industry is going to be affected. Zesa has no money now to import,” the source said.
Sources said the national power utility was owed in excess of $150 billion by consumers including local authorities.
According to analysts, a tariff review is necessary to enable the utility to unlock imports and be able to buy power locally to close the supply and demand gap.
They argued that the current tariff has actually failed to support the economy.
While having a cost-reflective tariff would make it easier for the utility to acquire electricity locally and regionally, it still needs to be able to maintain its aging network and draw in private sector investment.
Social and economic developments are mostly driven by energy. Therefore, a chronic lack of a sufficient and reliable supply would cause the economy to suffer grave losses.
While touring the national control centre and Harare Power Station on Thursday, Energy and Power Development minister Edgar Moyo said it was critical to work towards eliminating loadshedding.
He said priority should be given to productive sectors and “that the loadshedding schedule is well communicated and implemented equitably”.
Source ZIMetro News
