LIVINGSTONE MARUFU/ MONA LISA DUBE
Business is fretting over uncertainty caused by the debilitating power crisis that has hit Zimbabwe and crippling the manufacturing sector that experts say is now on the brink of collapse and exposed consumers to potential price hikes ahead of the festive season.
Firms are enduring prolonged unscheduled load shedding of up to 15 hours daily, resulting in reduced production, adding more problems to an already weakened economy due to several factors.
So dire is the power crisis that Members of Parliament this week expressed concern over the silence by Energy and Power Development Minister Zhemu Soda who is yet to make a long overdue ministerial statement pronouncing the government strategy to address the crisis.
Economist Eddie Cross also revealed that there appear to be no plan from the government on the power crisis amid calls for the private sector to position themselves in the energy sector and feed into the ZESA grid.
The Zimbabwe National Chamber of Commerce CEO Christopher Mugaga told Business Times that the power crisis is exacerbating the industry’s competitiveness as the businesses are pushing prices to sustain operations.
“Power crisis is making us lose a competitive edge to imports as our products will become more expensive than before,” Mugaga said. “If there will be shortages, certainly there will be increased smuggling of cheap imports into the country thereby weakening the industry.”
He said the problems being created may not be solved even after the power crisis is addressed.
“This will be a breeding place for substitute imports and it will be difficult to deal with even when the power shortages are attended to,” Mugaga said.
Mugaga warned that companies will increase prices to cater for the ballooning cost structures due to the running of generators in companies.
“Certainly those goods with high demand will continue to be needed hence the business will continue to produce it even at high cost and sell it at a high cost,” Mugaga said.
ZNCC chief economist Jeff Makiwa said the industry will face difficult times as a result of the crippling power crisis.
“The deepening energy crisis will further dress down economic growth and most companies, especially within the cold chain, mining, and manufacturing are more likely to close shop if the current energy situation is prolonged,” Makiwa said.Confederation of Zimbabwe Retailers president Denford Mutashu said the power crisis has added to the woes already affecting the industry.
“The power crisis will affect the local industry in the sense that most businesses will go for cheaper options to meet the festive season demand hence expensive local goods uptake will be reduced,” Mutashu said.
The government capacity to deal with the power cuts without the aid of the private sector has been put on the spotlight with Cross recently revealing that his meeting with President Emmerson Mnangagwa and some of his Ministers showed there was no solid plan to deal with the crisis.
“We have a power crisis. I went to see the President in January this year and told him in emphatic terms that if he didn’t address the power situation it was going to stop our economy in its tracks,” Cross, who is also the President’s advisor said.
“He (Mnangagwa) asked me to come back and I found four Ministers waiting for me. The President told them the private sector says we face a power crisis, what is the plan? There was no plan, no plan,” Cross said.
“The President turned to (ZESA chairman) Dr Gata and said to him Sydney what are you going to do and he said Mr President, ZESA doesn’t have the financial capacity to fix this problem. Our utilities are broken and the national utilities do not have a capacity to invest in infrastructure and new capacities. What are we going to do?”
There have been calls for the government to involve private players to generate electricity and put it on the national grid handled by the Zimbabwe Electricity Transmission and Distribution Company.
Kambuzuma MP Willias Madzimure said there was no proper pronouncement from the government on the solution to the power cuts and this has left everything on suspense.
Madzimure said Energy Minister Zhemu Soda should issue a ministerial statement on the power crisis.
“So, looking at the situation, we cannot wait any longer (for the Minister’s statement). What happens in industries is that you have your programmes and some of the equipment that we now use is digitalised to the extent that the moment it is interrupted, there are so many losses that the industry incurs,” he said.
“This is because there is no information as to when to expect electricity and when it will go off. The information that industry is using is now sketchy, gathered in bits and pieces as no one really understands what is going on.”
“Industry is also preparing for annual shutdowns and these also indicate to industry what they will then do next year – but no one is certain at the moment and the Minister is quiet. This is quite disturbing,” he said.
Economist Gift Mugano told this publication that some companies will not be able to operate efficiently due to disruptions as a result of the power outages.
“Companies are very eager to capitalise on the festive season therefore will be forced to produce under difficult situations using generators hence the costs of goods will go up and inflationary pressures will quicken,” Mugano said.
“Generator costs around US$0.40/kWh and could push the cost of that particular product by 30% depending on the intensity of power in heavy industries it could go to 35% of the total cost.
“Naturally, you need to have your labour at around 30%, 60% on the cost of raw materials and 10% should be on electricity and other compliance requirements.
“The moment the cost of electricity takes a huge share of the cost of production it has already disrupted the cost arrangements in a company hence some companies will not be able to power their activities with generators which can cause a threat to the availability of goods,” Mugano said.
