Power cuts derail industry target

December 2, 2021

TINASHE MAKICHI

 

The rolling power cuts could derail  industry projections of achieving about 60%  capacity utilisation before year-end as a number of firms are operating mostly on expensive generators, Confederation of Zimbabwe Industries president Kurai Matsheza has warned.

The country’s power utility, ZESA, is generating an average of about 1100 MW against a national demand at peak period of about 2 000MW due to frequent breakdown at its ageing thermal power stations.

To cover for the shortfall, Zimbabwe is importing from regional power utilities especially Eskom of South Africa and Cahora Bassa of Mozambique.

Industry is, however, calling for a sustainable solution to the current power situation which has become perennial.

“We have been affected big-time by the power outages and the prevailing situation is not sustainable for the industry as we speak. This situation is going to affect our projections on capacity utilisation,” Matsheza told Business Times.

“We are hearing that there are efforts being undertaken to address the power issue but there is a need for a sustainable solution to this because the problem has become perennial.”

He added: “All our businesses have been affected big-time and it is also paramount to note that it is not the role of industry to engage ZESA because industry should be focusing on running businesses while ZESA  focuses on its mandate of producing electricity. We can’t talk about these things over and over again without solutions. Industry is in trouble due to these power outages.”

Besides power, the industry has been battling various economic demons that have seen some businesses folding while some have been plunged into going concern situations.

Of late, industry has been in a serious accounting headache caused by the lack of a clear roadmap in the clearance of legacy debts by the Reserve Bank of Zimbabwe (RBZ).

The RBZ had promised to issue financial instruments to guide the clearance of legacy debts which have continued to pose a serious threat on the viability of the industry.

One of the financial instruments was supposed to address the accounting issues especially on companies listed on the Zimbabwe Stock Exchange. The apex bank’s Exchange Control, has to date processed and validated blocked funds amounting to US$1.2bn.

Despite the adoption of the debts by the Central Bank, most listed companies according to accounting standards, are supposed to include those debts and the dilemma has also been around the rate considering that the legacy debts were adopted at 1:1.

This has seen some listed companies posting huge losses which have been attributed to legacy debts.

Most lenders across the world have also now become risk-averse when dealing with Zimbabwe companies. Industry of late has been raising concerns over continued delays in the issuing of an instrument by the RBZ.

 

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