Cash crisis hits power generation

HARARE - National power utility Zesa Holdings (Zesa) says it is struggling to generate enough electricity to cater for the whole country due to the worsening cash crunch and lack of foreign currency.

The company’s subsidiary, Zimbabwe Power Company (ZPC), yesterday said it produced a total of 6 282 gigawatt hours (GWh) of energy in the 11 months to November 2016 against a target of 6 757GWh.

“Our output for January 2016 to date has been consistently lower than the output in the corresponding months last year due to the ongoing water conservation efforts at Lake Kariba. The liquidity crunch did not spare us either, hence, hampering procurement of spares as well as operations at the stations,” ZPC managing director Noah Gwariro said in a market update.

The Reserve Bank of Zimbabwe blames the acute cash crisis on widening trade deficit, illicit financial flows and declining exports.

However, the country’s deepening cash crisis has led to questions about the government’s management of the country’s financial systems, with indications that its increasing borrowings on the domestic market have created a financial black hole for the banking sector and the economy.

The introduction of bond notes in November — backed by a $200 million Afreximbank facility — has failed to ease the liquidity crunch which is forcing hundreds of people to sleep outside their banks to be able to get money.

Gwariro said the cash crisis was also affecting his company’s plans to refurbish small power generating plants across the country.

“Munyati Power Station was expected to ramp up its production to 50 megawatts (MW) by April 2016.  This was hampered due to liquidity challenges which resulted in delays in the delivery of key components to achieving improved output,” he said.

“Low coal stock levels at Munyati and Bulawayo Power Stations also led to loss of production time thereby missing set targets,” Gwariro added.

The latest development comes at a time the country is facing serious electricity shortages owing to about $30 million arrears accrued by Zesa to regional suppliers.

Zimbabwe imports almost 30 percent of its national power requirements from the Southern African Power Pool members such as South Africa’s Eskom and Mozambique’s Hydro Cahora Bassa.

Economic analysts said the worsening cash crisis will put more pressure on President Robert Mugabe’s government, which is facing its biggest financial squeeze since it dumped its hyperinflation-hit currency in 2009 and adopted the US dollar.

Without balance of payments support or funding from its traditional Western backers, Harare lives from hand to mouth, spending 82 percent of its national budget on public sector salaries.

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