Mozambique and South Africa to cut off Zimbabwe electricity over failure to pay US$27 million debt

South Africa’s Eskom and Mozambique’s Hydro Cahora Bassa (HCB) have given Zimbabwe up to December to clear its arrears.

Zimbabwe imports almost 30 percent of its national power requirements from the Southern African Power Pool members that include HCB and Eskom.

ZESA Holdings, the country’s power utility, owes two of these regional outfits a combined US$27 million.

Eskom is owed US$18 million, while the US$9 million balance is owed to HCB.

Having struggled to clear the arrears over the years, patience among the regional power utilities is wearing thin.

If South Africa and Mozambique decide to unplug Zimbabwe, the country would be gripped by a power crisis that could further dampen prospects for early economic recovery.

Following negotiations, HCB now wants the arrears to be cleared by the end of next month, while Eskom would want to go into the New Year without being bothered by the debt.

Julian Chinembiri, the managing director of the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a unit of ZESA, said while power suppliers have stabilised, arrears were mounting.

“They (Eskom and HCB) have understood our economic challenges and have given us a grace period to clear our arrears,” he told the Financial Gazette.

“Eskom gave us up to December 2016 while HCB gave us up to the end of November to clear the arrears.

“At the moment we are enjoying stable power supply and we would want to keep supplies as they are and ensure that load shedding does not occur

“As you are aware, we still have prepayment arrangements with Eskom and HCB. For Dema, the US$8 million is current. For the Zimbabwe Power Company (ZPC), it’s long overdue but we are paying them a certain percentage of our revenue collection every month,” Chinembiri added.

Zimbabwe imports about 350 megawatts (MW) of electricity from Eskom and 50MW from HCB.

The power utility is currently struggling to generate half of the country’s national demand, which is estimated at 1 600(MW).

To bridge the deficit, the country has been importing from Eskom and HCB.

It has also been procuring 100MW from the controversial diesel generators at Dema Power Plant.

ZETDC owes about US$8 million to Dema Diesel Power Plant, whose establishment this year was a subject of contention between government and ZESA .

It has also failed to pay for power supplies from a sister firm, ZPC, which is owed US$754 million.

The country has, for, almost a year enjoyed steady supply of electricity after the power utility secured power imports to plug a generation gap in the country caused by low local generation capacity.

It has also been impacted negatively by failure by domestic consumers to pay for their electricity, with arrears now amounting to about US$1 billion.

Power supply bottlenecks are among the key factors undermining efforts to rebuild the failing economy, and government has been warned to make sure ZESA is recapitalised if the country is to reverse the decline.

Source: The Financial Gazette

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