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    'Billing in forex not enough to save Zesa'


    August 1, 2022 - Business Weekly

     

      Zesa Holdings will still be unable to provide enough electricity to consumers and meet its operational obligations despite the Government taking measures to improve its capacity by allowing the power utility to charge exporters and partial exporters in hard currency, a senior Government official said.

      Zimbabwe is facing acute shortage of electricity due to limited generation capacity and aging equipment. Limited water in the country's biggest power hydro plant, Kariba South, due to droughts in previous years, have also compounded the situation.

      In order to balance demand and supply, ZESA resorts to widespread load shedding, which results in outages that stretch for several hours or even days, negatively impacting economic and household activities. Some consumers are forced to use alternative sources of energy, such as diesel, but these are prohibitively expensive.

      Analysts say critical shortage of electricity does not augur well for the country's targets, especially building a US$12 billion mining industry by 2023 and the national vision of transforming the country into an upper middle income economy by 2030.

      In terms of statutory instrument 131 of 2022, the Reserve Bank of Zimbabwe (RBZ), gave Zesa exchange control approval to bill exporters and partial exporters in foreign currency, as part of broad measures to enhance the utility's operational capacity.

      An exporter is a business organisation, which exports on average eighty percent or more per quarter of its total output of goods or services produced or provided by it in Zimbabwe, for which it lawfully receives any foreign currency.

      A partial exporter means a business organization, which exports on average less than eighty percent per quarter of its total output of goods or services produced or provided by it in Zimbabwe, for which it lawfully receives any foreign currency.

      'Notwithstanding subsection (1) of section 4 of the principal regulations and further notwithstanding section 2 of Statutory Instrument 142 of 2019, Reserve Bank of Zimbabwe (Legal Tender) Regulations, 2019, ZESA shall be allowed to bill in United States dollars or the equivalent in Euro or any other currency denominated under the exchange control order at the international cross rate prevailing on the date of payment for the supply of electricity by ZESA to the exporters and partial exporters,' says SI 131 of 2022.

      Sub - section 2 of the legal provisions states that an exporter billed in US dollars in terms of subsection (1) shall pay the bill for the electricity supplied by ZESA in US dollars or the equivalent in Euros or in any other currency denominated under the exchange control order, at the going exchange rate.

      Subsections (1) and (2) shall apply to every exporter and partial exporter, except that ZESA shall not bill them to the extent of more than thirty-five per centum of the electricity supplied to the partial exporter with the balance settled in Zimbabwean dollar at the prevailing interbank rate.

      Secretary for Energy and Power Development, Engineer Gloria Magombo ,said the legal provisions have been in place for a while now and seek to enhance ZESA's ability to supplement domestic power supply through imports from the region.

      'You are aware that ZESA has to complement the supply of electricity using imports and these have to be paid in foreign currency together with critical spares for local generation, distribution and transmission infrastructure, external insurance for critical equipment and infrastructure and payment of external loans,' she said.

      Eng Magombo said the need for ZESA to have a revenue stream in foreign currency was critical and the conditions for use of the funds were clearly stipulated. This was critical to ensure ZESA is capacitated to deliver on its mandate given the National Development Strategy 1 has utilities and infrastructure as key to attainment of key targets.

      'The amount ZESA collects from this arrangement is still not adequate to meet their foreign currency requirements to meet their full obligations and they still have to apply through their banks for other needs to meet their day to day operations,' she said.

      Amid the crippling shortage of power in the country, the State power utility has since indicated that it will no longer charge mining houses tariffs below cost of production as it is struggling to service 'ballooning power import debt.'

      Exporters, such as mining companies, will be charged 10,63 US cents per kWh from August 1, ZESA executive chairman Sydney Gata said in a letter to miners. Power from diesel-run Hwange plant, which is under expansion to add 300 megawatts, is produced at 10,7 US cents/kWh, translating to 12 cents for customers, he said.

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