Power deficit looms in Zimbabwe

By Africa Moyo

Zimbabwe is starring the possibility of crippling electricity shortages in the near future if the Reserve Bank Zimbabwe (RBZ) does not release funds requested by coal miners to import spare parts, it has emerged.

Hwange Colliery
Hwange Colliery

Coupled with low rains this year, which might impact on hydroelectricity generation at Kariba Hydro Power Station, the power situation might get dire.

The country’s top coal miners — Hwange Colliery Company Limited (HCCL) and Makomo Resources — could not reveal the amount of foreign currency they have applied for, but concurred that production levels have “unacceptably” plummeted.

Last week, sources told The Sunday Mail Business that Zimbabwe Power Company (ZPC) officials visited Makomo Resources’ operations in Hwange recently to check on the magnitude of their challenges given the low coal volumes being delivered for electricity generation.

It is understood that ZPC — the electricity generating arm of Zesa Holdings — is getting about 2 000 tonnes of coal per day from miners, which is a far cry from the 8 000 tonnes required.

Unconfirmed reports suggested that ZPC is left with coal stocks of just over 100 000 tonnes, which could be sufficient to generate electricity for about 10 days, unless the RBZ releases payments for the purchase of spare parts to ramp up production. ZPC spokesperson Ms Fadzai Chisveto, requested for questions in writing but did not respond during the last two weeks.

However, HCCL managing director Engineer Thomas Makore, last week confirmed that foreign currency challenges have negatively impacted their operations and turnaround strategy.

“Foreign currency shortages have caused delays in the resuscitation of our underground mining operations.

“The shortages have also caused shortages of spare parts for our plant and equipment. Our contractors are also affected because they need imported spare parts for their equipment.

“Our productivity has reduced due to lower equipment reliability and availability,” said Eng Makore.

He declined to reveal the extent of the production decline saying as a Zimbabwe Stock Exchange (ZSE) listed firm, they are now in a closed period and cannot release share price sensitive information.

“As a listed company, we are not able to discuss production figures during this is a closed period in accordance with stock exchange regulations,” said Eng Makore.

Last week, Makomo Resources company director Mr Raymond Mutokonyi said foreign currency shortages have affected their operations, resulting in a serious knock on production.

“Production is low at the moment. Machinery is broken down, in fact we have more malfunctioning machinery than working ones. This is because we don’t have foreign currency.

“Ours is open cast mining and equipment such as dump trucks have been affected,” said Mr Mutokonyi.

Miners badly require foreign currency to acquire equipment regularly.

Makomo was previously owed US$28 million by ZPC but payment was eventually made using Treasury Bills which, unfortunately, cannot be easily converted into foreign currency.

Coal miners have in the past called on Zesa to reduce its payments for power imports to Eskom of South Africa so as to capacitate coal miners.

The plan was aimed at increasing coal production and deliveries to thermal power stations so as to increase power generation.

Makomo’s output in the third quarter of last year averaged between 220 000 tonnes and 245 000 tonnes, representing a 23 percent drop from the same period last year.

But output is said to have fallen even further due to foreign currency challenges.

HCCL — whose production had risen to 300 000 tonnes per month towards year end from an average of 30 000 in the first quarter of 2017 — is now pinning hopes on increasing sales from exports to neighbouring countries to circumvent the foreign currency squeeze.

No comment could be obtained from RBZ Governor Dr John Mangudya as he was not picking his mobile phone. He had not yet responded to questions sent through WhatsApp by the time of going to print. The Sunday Mail