Zimbabwe’s grappling with power outages could cost it dearly

By Farai Shawn Matiashe
Posted on Monday, 5 December 2022 16:49

FILE PHOTO: A motorist drives on top of the Kariba Dam wall in Kariba, Zimbabwe, February 19, 2016. REUTERS

President Emmerson Mnangagwa has sailed through the impact of Covid-19 and Russia’s invasion of Ukraine. With several months away from Zimbabwe’s general election where he will be seeking another term, Mnangagwa is facing a bigger challenge that could further cripple the Zimbabwean ailing economy: a power crisis.

His counterpart Cyril Ramaphosa in South Africa is unlikely to bail him out with increasing exports, as state electricity company Eskom has also been struggling with rolling blackouts in Zimbabwe’s neighbouring country.

Zimbabwean authorities in late November were ordered to shut down operations at the country’s main power generation plant Kariba until January next year due to low water levels in Kariba Dam.

“As of 25 November, ZPC/KHPC no longer has any usable water to continue undertaking power generation operations at Kariba South Power Station,” Engineer Munyaradzi Munodawafa, a chief executive of the Zambezi River Authority, mandated to manage the dam and water resources in the Zambezi River basin, wrote to State-owned Zimbabwe Power Company (ZPC) in a letter seen by The Africa Report.

“[…] the Zambezi River Authority is left with no choice but to firmly guide that ZPC/KHPC immediately ensures that generation activities at the South Bank Power Station are wholly suspended henceforth, until January 2023.”

The two utility power companies ZPC and Kariba Hydro Power Company Limited (KHPC), located in Zambia near the borders, share Kariba Dam.

Economic cost

As power cuts in some areas last for more than 12 hours and are expected to worsen following the order to shut down the Kariba power plant, economists have warned growth projections by Finance Minister Mthuli Ncube will be further revised downwards.

“Power is the engine of economic activity and therefore without it the wheels of the economy will not turn,” Kurai Matsheza, president of the Confederation of Zimbabwe Industry, tells The Africa Report. “If this situation is not addressed speedily the revised growth projections for 2022 … will be further revised downwards.”

In his $6.5bn budget presentation for next year, Ncube projected the economy to grow 4% this year and 3.8% in 2023.

“Due to the base effect, global and domestic developments, particularly the impact of high inflation and resultant stabilisation measures on credit and demand, the economy is now projected to grow by 4% in 2022, a further downward revision from the mid-year projection of 4.6%,” he says in the new Chinese-built parliament in late November.

Diversification of economic activities

Tinashe Manzungu, president of the Zimbabwe National Chamber of Commerce (ZNCC), says through the diversification of economic activities, the energy demand is rising but the electricity supply is relatively stagnant.

“It is obvious that electricity demand is way above its supply, thereby showing signs of potential economic growth. This causes the country’s factor endowment to be underutilised and ultimately depend on foreign supply of finished goods or raw materials for its economic growth, which is costly.”

Denford Mutashu, President of the Confederation of Zimbabwe Retailers (CZR), says the shutdown is a heavy blow to the economic growth momentum that has already faced many obstacles, including Covid-19, inflation, and exchange rate instability.

“Production will decline and imports are set to increase. As a business, we are shocked how we got here (shutdown) in the first place,” he says, pointing out that the business community was appealing to Mnangagwa to intervene.

Can increasing electricity imports help?

The southern African nation is experiencing power shortages due to a number of factors, including climate change, which is causing water levels to drop at the Kariba Hyrdo-electric power plant as well as ageing generation equipment at a coal-fired Hwange power station.

Zimbabwe needs an average power demand of about 1735MW, according to the Zimbabwe Electricity Distribution Company (ZETDC).

Due to water levels in Kariba Dam, Kariba Hydropower station has been producing way less than its installed capacity of 1,050MW.

As of 29 November, Zimbabwe’s available total electricity was at 764MW with the Kariba power plant generating 602MW while Hwange thermal power plant is producing 150MW and the remaining from the Munyati power station.

Kariba power plant ordered to be shut down is currently producing 70% of Zimbabwe’s available generated electricity.

Filling power deficit

According to government officials, to fill the power deficit the country imports between 200MW and 450MW from its power utilities from its neighbours including Eskom, Mozambique’s Hidroeléctrica de Cahora Bassa (HCB), and Zambia Electricity Supply Corporation Limited.

South Africa, one of Africa’s biggest economies, is experiencing Stage 2 load shedding running daily from 4pm to 5am until further notice.

https://twitter.com/Eskom_SA/status/1596857928346374144/photo/1

Meanwhile, Zambia has been touting excess electricity and it is yet to exhaust its allocated quota at the Kariba power plant.

Vince Musewe, an economist, says the Zimbabwean government should come up with an alternative.

Consistent power is critical in any economy and is a national security issue that needs continuous attention, but as we know we have a habit of waiting until we have a crisis. Kariba shutdown would have a huge negative impact on the economy as a whole and we need an alternative,” he says.

“We may have to import more, thus increasing the cost of doing business and fuelling inflationary pressures.”

Manzungu says importing will have a negative impact on the economy, aggravating the lack of hard currency.

“The industry as an intensive energy user group will then pass the cost to the consumer whereas the government is taking a de-dollarisation trajectory,” he says.

Addressing journalists in Harare last week, Energy minister Soda Zhemu said his ministry will import power from neighbouring countries and they have come up with measures through utility Zesa and independent power producers to mitigate power challenges.

“In the immediate term, Zesa is currently negotiating for additional imports from the current suppliers,” he says.

Will power crisis dampen Mnangagwa’s bid?

During his campaign, before winning the controversial general election in 2018, Mnangagwa promised to solve the prolonged power crisis.

With just a few months to the general election and the load shedding, economists say this and other economic challenges will have little impact on the outcome of the presidential poll.

“Zimbabwe elections are more political than economics based so there would be no impact at all,” says Musewe.

Another economist, Victor Bhoroma, says considering that power shortages are a recurring issue, the problem will not be a huge factor in elections. “There could be a small percentage that could be frustrated by power shortages but will not swing votes,” he says.

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