Coal producers and Zesa Holdings come face-to-face at a crunch meeting next week to thaw frosty relations amid revelations the power utility is struggling to pay for coal deliveries with its debt growing by more than half to ZWL$103m.
The debt was ZWL$68m in November and there are fears the failure by Zesa to honour its obligations threatens the generation of electricity. Hwange Power Station is a key generator as low water levels at Kariba have affected generation capacity.
Coal Producers Association chairman, Raymond Mutokonyi, told Business Times that a crunch meeting convened by the ministry of energy and that of mines is expected to bring finality to the deadlock.
“The reason why the debt is ballooning is that Zesa only pays ZWL$2.5m weekly instead of ZWL$10m we have agreed upon,” Mutokonyi said.
“Instead of honouring its obligation, Zesa executive chairman Sydney Gata is dismissing our coal as useless, a move which we are not taking lightly as coal producers.”
Last week, Gata told state media the power utility was paying coal producers notwithstanding that some of the supplies were sub-standard and damaging equipment.
“I was in Hwange and everyone is complaining about the quality of coal.
Only Hwange can complain, not all those makorokozas,” Gata was quoted as saying. When asked if the coal producers can cut supply to Zesa,
Mutokonyi said dialogue between coal producers and Zesa is the only solution to the problem.
Zesa is owed over ZWL$1.2bn by its customers including mining companies that owe the power utility over $200m.
The country is grappling with serious power outages after Kariba downed production to 360MW from the installed capacity of 1050MW, leaving the country to be dependent on thermal power stations and imports.
Zimbabwe, which is generating 464MW, requires 1,400MW daily with the rest of the megawatts coming from imports from South Africa and Mozambique.
Thermal power stations, which are powered by coal, are not producing enough due to lack of diesel for the excavators for coal mining.
As of January 20, Hwange was generating 64MW due to flash floods that have affected the area but the thermal power stations returned to normalcy on Tuesday.
Mutokonyi said since Zesa is ordering mining companies to pay in foreign currency, it should also pay them in forex the equivalent of ZWL$103m at the interbank rate.
However, according to coal producers, Zesa is not willing to pay anything, later alone in forex. Mutokonyi said although Treasury has allocated fuel to the mining companies, the diesel is not enough for the extraction of coal.
Resultantly, production has gone down by a big margin making it difficult to generate electricity for other thermal stations besides Hwange.
Most of the coal extracting machines including excavators require diesel to function and in the absence of the precious liquid commodity some mines are operating at a very low level.
When contacted for comment, Gata said he does not do interviews over the phone instead he referred this reporter to the public relations department for interview booking.