Zimbabwe: Prolonged power cuts will hurt the already struggling economy

By Farai Shawn Matiashe
Posted on Thursday, 30 September 2021 10:36

A street vendor prepares fried chips for sale using firewood, using candlelight and a cellphone, as the country faces 18-hour daily power cuts, in Harare, Zimbabwe, July 30, 2019. REUTERS/Philimon Bulawayo

In mid-September this year, Zimbabwe’s power utility company imposed load shedding schedules lasting up to 12 hours. Efforts to boost electricity generation in the country have been hampered by corruption, particularly during the tender processing. However, these power cuts are set to further weaken an already fragile economy.

The Zimbabwe Electricity Distribution Company (ZETDC), without revealing when the situation will be normalised, cited a combination of limited generation capacity and repairs to power infrastructure as the cause of the load shedding.

Zimbabwe heavily relies on its only hydropower plant, the Kariba South Power Station, which is the biggest power generation plant in the country, with a total generation capacity of 1050 megawatts (MW).

The country also has four thermal power stations including Hwange Power Station, the largest coal-fired power station with a capacity of 920MW.

Reduced power

Power generation at these stations is often reduced due to the maintenance of ageing equipment.

Zimbabwe needs an average power demand of about 1735MW, but the power utility company’s total power supply currently ranges from 1240MW to 1600MW, according to ZETDC.

Power cuts have severely affected my business. Power is often restored during the night, yet there is curfew, meaning we cannot work during the night.

This means the power average deficit is 145-500MW depending on imports availability and local generation performance.

Zimbabwe imports power from South Africa’s power utility Escom and Mozambique’s Hydro Cahora Bassa (HCB). In 2020, the country imported at least 30% of its power requirements, according to the Zimbabwe Energy Regulatory Authority (ZERA).

Zimbabwe has since engaged power utilities from its neighbours, Zambia and Mozambique “for a possible supply of 280MW beginning in October 2021” in a bid to reduce the load shedding schedules.

Zimbabwe cannot afford this

John Robertson, a Harare-based economist, says Zimbabwe’s economy – which is on a recovery path – cannot afford to have such prolonged power cuts. “They could force [the] government to revise downwards its GDP [Gross Domestic Product] forecast, perhaps to 5.1%,” he tells The Africa Report.

In his mid-term budget review in Parliament in July this year, finance minister Mthuli Ncube projected that Zimbabwe’s economy would grow by 7.8% in 2021.

Robertson says if Zimbabwe does not resolve its power shortages, this might set limits to economic growth in 2021, considering that South Africa is in a power crisis.

“The wheat crop is at risk in its final growth stage, but the mining and manufacturing sectors are bound to reduce output. Tax and export revenues will fall too and employment growth will be halted. We should have started to build a new power station years ago,” he says.

Band-aid solution of generators

Stanely Chitate, a small welding firm owner in an industrial area in Mutare – Zimbabwe’s third-largest city – says his workers cannot work on some days due to recurring power outages. “Power cuts have severely affected my business. Power is often restored during the night yet there is curfew meaning we cannot work during the night,” he says.

Small businesses like Chitate’s bear the brunt of power shortages as they provide employment to millions of Zimbabweans in a country that has a high unemployment rate.

Additionally, the use of generators in Zimbabwe fuels the costs of running businesses as most fuel service stations only sell fuel in foreign currency and it is expensive. Since 8 September, a litre of petrol trades at $1.38, while a litre of diesel trades at $1.34, according to ZERA.

Chitate says he cannot afford to run his small business firm on generators.

Vince Musewe, an economist, says any problem with power supply has a stifling effect on economic activity and growth.

“Any increase in the cost of doing business due to erratic power supplies creates inflationary pressures and can also lead to job losses. So, it is not good for anyone. We must resolve the power issues once and for all and ensure we do not have such recurring problems,” he says.

Setbacks on efforts to overcome electricity shortage

Zimbabwe’s efforts to boost its electricity supply have been hampered by corruption, particularly during the tender processing.

In 2014, the Zimbabwe Electricity Supply Authority (ZESA) contracted Intratrek Zimbabwe, owned by businessman Wicknell Chivayo, to implement a 100MW solar project worth $200m in Gwanda, a small town 126.8 kilometres from Bulawayo. Seven years later, the company – which was given $5m – has yet to install even a single solar project.

The tenders for power projects that Chivhayo won are worth more than $600m – most which have not even started – including:

  • $73m for the refurbishment of the Harare Power Station;
  • $163m for the restoration of the Munyati Power Station;
  • $248m for the Gairezi Power project by the Zimbabwe Power Company (ZPC) – a subsidiary of ZESA.

In 2015, Sakunda Holdings, owned by President Emmerson Mnangagwa’s business ally Kudakwashe Tagwirei, was awarded a contract to install the 200MW plant in Seke, just outside Harare, despite not having participated in the tendering process for the project.

Sakunda Holdings, which ran the plant only between July 2016 and March 2017 before shutting it down citing diesel shortages, was awarded the tender after an order came from the president’s office, according to a 2019 audit report by PriceWaterhouseCoopers.

“The preponderant expert view seems to suggest that the costs of production of power at the plant would be exorbitant to such an extent that the off-taker would not be able to buy it and sell it to the consumers,” says Fortune Chasi, the former energy minister, in reference to the 200MW plant in Seke.

“It is clear that good and proper corporate governance is key for energy security,” Chasi says, adding that there’s clearly a need for heavy investment in the power sector and it is evident that private players should and will play a greater role in the generation of power.

How did this all start?

This is not the first time that Zimbabweans have endured prolonged power outages, as the country has been struggling with inconsistent electricity supply for the past two decades.

Between 2008 to 2009, Zimbabwe failed to import electricity due to hyperinflation that had eroded its local currency, leading to disruptions in power supply around the country.

In 2019, ZETDC rolled out its unpopular, daily 18-hour load shedding schedules, partly because of prolonged droughts leading to low water levels in Lake Kariba and a decline in imports due to outstanding debts in South Africa’s Escom and Mozambique’s HCB.

Although this time around water levels are much better, this has been counterbalanced by old equipment which constantly fails.”

In 2019, Zimbabwe owed $45m to HCB and $33m to Escom, which was cleared in 2020 by the then energy minister Chasi. According to him, the contributing factors to erratic power supplies in the country include the antiquated power generation infrastructure.

“During my tenure, low water levels at Lake Kariba were a serious setback on power generation. Although this time around water levels are much better, this has been counterbalanced by old equipment which constantly fails,” he says.

Going forward

Tendayi Marowa, an energy management and climate change mitigation consultant with Comprehensive Energy Solutions, says Zimbabwe has huge solar potential, but the country has not done enough to exploit the energy resource.

“Solar [photovoltaic] PV is free energy from the sun, provided [that] financial resources to purchase the required equipment [are] found. This huge upfront cost is one of the barriers to the implementation of solar power plants,” he tells The Africa Report.

However, the Catch-22 in all of this is how to quash corruption in the midst of a failing economy? As per regression analysis, the high level of corruption is negatively linked to lower levels of investment and economic growth.

Zimbabwe could very well be a leading producer of solar energy thereby cutting its dependence on others and ending its shortage; however, with growing power cuts, the economy is looking less appetising for investment as well as growth, as the cycle of turning the switch off to corruption continues.

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