HARARE – Zimbabwe’s more than US$430 million crippling debt to Hwange Electricity Supply Company (HESCO) has thrown the country’s power sector into chaos, with poor debt servicing threatening to destabilise the nation’s energy supply and hinder economic growth.
A recent report by the Parliamentary Portfolio Committee on Energy and Power Development has highlighted that the sector is facing a confluence of challenges, including significant debt accumulation, aging infrastructure, and the impact of climate change.
While the Ministry of Energy and Power Development acknowledged the report and outlined ongoing efforts to address these issues, the depth of the problems has raised concerns about the nation’s energy security and its ability to sustain economic growth.
The Deputy Minister of Energy and Power Development, Yeukai Simbanegavi, presented the Ministry’s response to the Committee’s report, appreciating its comprehensive assessment of the electricity supply situation.
The report scrutinised generation capacity, distribution challenges, and sector inefficiencies, noting several key areas requiring urgent attention.
One of the most pressing concerns is the substantial debt owed by the national power utility, ZESA Holdings, to HESCO.
As of November last year, this debt had reached a staggering US$430 million, accumulated from unpaid power supplied by the newly commissioned Units 7 and 8 at the Hwange Thermal Power Station between May and November 2024.
HESCO, a joint venture between the Zimbabwe Power Company (ZPC) and China’s Sinohydro Corporation, warned that failure to settle this debt could jeopardize the continued operation of these crucial units, which contribute a significant 600 megawatts (MW) to the national grid.
Units 7 and 8, commissioned in 2023 at a cost of US$1.4 billion funded by a loan from the China Export and Import Bank, are vital for reducing Zimbabwe’s reliance on imports and stabilizing the base load power supply.
The potential shutdown due to unpaid dues could exacerbate the already severe daily power outages, which can last up to 16 hours, hindering industrial activity and impacting daily life.
The Committee urged Treasury to prioritize loan repayments. The Ministry indicated that debt restructuring initiatives are underway.
“The issue of loan servicing and project cost management was also observed where the Committee noted poor loan servicing and inflated project costs.
The Ministry responds that it has taken note of the observation while emphasising that all reference projects were executed through established public procurement tender processes designed to ensure transparency, accountability and optimal value for public funds,” read the report.
The Portfolio Committee’s report also highlighted broader systemic issues within the energy sector.
These include legal framework gaps. While acknowledging the existence of the Zimbabwe Energy Regulatory Authority (ZERA), the Committee initially raised concerns about the absence of a dedicated electricity regulatory commission.
The Ministry clarified that ZERA, established under the Zimbabwe Energy Regulatory Act, absorbed the functions of the previous Zimbabwe Electricity Regulatory Commission.
However, the Committee also pointed out insufficient legislative provisions for infrastructure modernization and limited support for renewable energy adoption within the Electricity Act.
The Committee further expressed concerns about tariff structures affecting the financial sustainability of power projects.
The Ministry highlighted that ZERA employs a rate of return methodology and that Section 53 of the Electricity Act provides for tariff regulation to ensure cost recovery for providers and reasonable returns on investment.
The Committee also urged ZERA to secure investment for power plant upgrades and new projects to reduce reliance on the Kariba South Hydro Power Station, whose generation is significantly limited by reduced water levels in the Zambezi River.
The Ministry empathised its active facilitation of public-private partnerships and acknowledged the importance of diversifying the energy mix, including exploring nuclear energy potential alongside thermal and renewable sources.
The report further indicated the need for increased government investment in renewable energy was highlighted, with the Ministry pointing to the 100 million ZiG allocation to the Rural Electrification Fund and various presidential schemes aimed at expanding renewable energy access.
The Committee recommended robust revenue assurance systems, to which the Ministry responded by highlighting the deployment of prepaid and smart metering systems.
Regarding current power generation capacity, the Deputy Minister reported that Kariba South is currently generating only 350 MW of its 1,050 MW installed capacity due to reduced water allocation.
Hwange Thermal Power Station, including the new Units 7 and 8, is generating 1,084 MW of its 1,520 MW installed capacity. Independent power producers, mostly solar, contribute an additional 69 MW.
Challenges hindering efficient electricity supply include climate change impacting hydro-power, aging infrastructure, theft and vandalism, and skills shortages.
The Ministry outlined various countermeasures, including promoting captive power plants, repowering old units, replacing copper cables with aluminum, enhancing monitoring and community awareness, strengthening legal frameworks against vandalism, and improving salaries and career development for energy sector professionals.
