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Zimbabwe braces for darker days ahead

Zimbabwe braces for darker days ahead

Power outages of up to 19 hours a day, dark industrial parks and streets in the capital Harare as well as rising production costs – owing to additional costs running diesel generators – that are likely to drive inflation are the hallmarks of Zimbabwe’s newest electricity crisis.

Worsened by limited production of electricity from the Kariba hydro-power plant as a result of plunging water levels, Zimbabwe is suffering acute power shortages. Imports from South Africa have been problematic as Eskom battles its own power supply crunch mainly as a result of frequent breakdowns to its generating units.

“We cannot sustain to operate everyday using the generator. Human resources is having to reconfigure shifts so that some groups can work with extra capacity during the nights when we have a few hours of grid supply, but even then we are way below half of normal capacity,” a manager with a manufacturing company in Harare told Business Report on Saturday.

Zimbabwe is only producing 605MW of electricity against peak demand of over 2000MW. Supplementary imports of up to 300MW from Eskom have been hobbled by reduced capacity in South Africa that have resulted in load-shedding while Zambia is also introducing load-shedding as a result of the low water levels at Kariba.

This is jeopardising electricity imports of about 100MW secured from Zambia in January. Zimbabwe also gets additional imports from Mozambique but with local production capacity curtailed, the power deficit is now impacting production capacity, with economic productivity likely to be affected, according to economists and industrialists.

“Power is now a major threat to local industry as we plan and budget for 2023. With problems at Hwange and reduced generation capacity at Kariba, Zimbabwe should brace for darker days ahead. Alternative plans increase production costs thereby making our products and services uncompetitive, compared to imports,” explained governance expert, Reggie Manditereza.

The electricity imports Zimbabwe is getting from Eskom when the South African utility can spare supply is mainly being directed to Zimbabwe’s mines, which have a standing contract to help the Zimbabwe Electricity Supply Authority pay for imports through payments in hard currency.

President Emerson Mnangagwa, whose administration has been blamed for poor planning to avoid the current power crisis, said on Sunday that more electricity imports will help Zimbabwe avoid industry grinding to a total halt. However, this would require mobilisation of foreign currency to pay upfront for the imports.

“Enough resources have to be mobilised for that to happen… the cost of importing power is relatively less than a slowdown in industry or stoppages altogether, not to mention delays in new investments caused by power shortages,” Mnangagwa said.

The Confederation of Zimbabwe Industries says in an industry and economic research paper to be released this week that the current power crisis is “stalling growth momentum”. This comes at a time the Zimbabwean economy is also sinking into a high production cost base owing to dollarisation.

According to the CZI, about 35.4% of registered companies in Zimbabwe “registered a decrease in output during the third quarter to the end of September while only 42.5% recorded an increase. The fourth quarter to the end of December is likely to be worse off in terms of production volumes owing to the current power deficits.

Kurai Matsheza, the president of the CZI grouping of manufacturers, emphasised the “critical role of energy supply and the need to address the current crisis urgently and resolutely” to avoid a plunge in production and economic productivity.

Finance Minister Mthuli Ncube has already revised downwards Zimbabwe’s economic growth for 2022 from 4.6% to 4%. Government critics such as former finance minister Tendai Biti argue that Zimbabwe’s “power sector requires urgent attention on triple agenda of generation transmission and demand side management”.

BUSINESS REPORT

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