Power cuts ravage Zim companies

PHILLIMON MHLANGA
Local companies are losing an estimated ZWL$2,5m annually in potential revenue due to crippling power cuts, a latest survey conducted by the Zimbabwe National Chamber of Commerce shows.

The survey will be released at a local hotel today. The study investigated the impact of electricity outages on activities of the business community in Zimbabwe. Using a sample of 176 firms across five regions of Zimbabwe (namely Harare, Bulawayo, Mutare, Masvingo and Gweru); and operating in
manufacturing sector (62% of the respondents), agriculture sector (17%), services sector (12%) and other sectors (9%).

Zimbabwe, which requires about 1 800 megawatts (MW) but generates less than 600MW, is experiencing rolling black outs on a daily basis due to receding water level at Kariba Dam and inefficiencies at the country’s thermal power plants at Hwange, Bulawayo,Munyati and Harare.

To cover for the shortfall, State-owned power utility ZESA is importing expensive electricity from regional suppliers, mainly from Eskimo of South Africa and Hydro Cahora Bassa of Mozambique.

ZESA is procuring very little from the Day Ahead Market, which is a market for trading power by regional players.

Almost half of companies interviewed indicated that they are subjected to at most 18 hours of load-shedding daily, something which affect their business activities, with production being severely curtailed.

“On monthly average, a typical business entity in Zimbabwe loses around
ZWL$20,000 worth of production output, and ZWL$300,000 worth of sales.

The corresponding annual figures are ZWL$200,000 and ZWL$2.5m. In summary, electricity power outages in Zimbabwe costs businesses in terms of both production output and sales,” the survey shows.

“About 65% of respondents indicated that they only have on average up to six hours of electricity supply per day within their premises, while 20% said they normally have electricity on average between 7 to 12 hours per day. Thus more than 80% of businesses have electricity for less than 18 hours per day in Zimbabwe, and this precarious situation simply implies that firm production and/or manufacturing activities are seriously curtailed.”

Most firms highlighted that power cuts seriously affected their business activities with 40% of respondents indicating that the phenomena result in significant loses given that 50% of their production time were lost, while 45% of firms indicated that power outages resulted in more than 50%
production output loses.
Companies said they lose production time and output due to power outages, and this was not a healthy economic situation.

More than 80% of respondents also indicated that there were losing customers due to rolling blackouts which results in them failing to meet production deadlines, missing delivery due dates.

Consequently, customers, turn to alternative suppliers, losing millions in potential revenue.

“Majority of business (representing 90% of the sample) indicated that electricity outages negative affects their revenues, resulting in revenue losses. The losses, among others, come due to the fact that they will have reduced sales; and some order will be lost as they will be considered as un-
reliable suppliers.”

It was also revealed that about 87% of surveyed firms suffered reduced or decreased labour productivity. According to respondents: “These losses emanates from the fact that during electricity outages salaried labour will be lying idle, but the same will be paid in full their salaries at the end of the month.”

This, they said loss in labour productivity also result from unplanned overtime work, whereby some labour will do overtime (once electricity power is back for instance after normal working hours or during weekends) to produce same output level that they were expected to produce during normal working hours, but they will be paid extra hourly rates for each extra hour worked.

Companies also incur huge expenses through the use of expensive generators as an alternative source of electricity. Most companies inter-
viewed highlighted that each business entity uses about 22 litres of diesel per day to power production.

It is estimated that on average each firm purchases fuel worth ZWL$322 a day whenever there is no electricity to ensure smooth running of its business activities. This amount is very much expensive as respondents indicate that the daily average total amount they pay for electricity will normally be less than ZWL$10.

This has also reduced company profits significantly. About 88% of surveyed firms indicated that the use of generators instead of electricity reduces their profits.