LIVINGSTONE MARUFU
The crippling power crisis that has hit the country is threatening business particularly in the manufacturing and agricultural sectors where observers say millions of dollars could have been lost due to the debilitating shortages.
So devastating are the power cuts that the government is in panic mode and working frantically to find a lasting solution which is unlikely soon as neighbouring countries that usually provide electricity including Zambia and South Africa are also facing challenges.
Zimbabwe is experiencing power cuts of up to 12 hours due to reduced generation at Kariba on low water levels. Companies are running on diesel powered generators which will increase the cost of production that the industry says will ultimately be passed to the consumer who will be forced to buy expensive goods.
Experts say the power crisis has already exposed the country’s fragile economy as business could have lost millions of dollars while US$300 million of irrigated tobacco crop is under threat as the shortages are affecting the curing of the golden leaf which is one of the country’s biggest foreign currency earners.
In a letter dated December 5 2022, the Zimbabwe Tobacco Association (ZTA) pleaded with the Lands, Agriculture, Water, Fisheries and Rural Development Minister Anxious Masuka to intervene in the power crisis affecting tobacco farmers.
“There is an immediate requirement for tobacco farmers to access concessionary priced diesel fuel for generator use either through their contractor or through a government facility. Listings of affected farmers and requirements can be accessed through associations, unions, contractors and TIMB,” reads part of the letter.The association called for an “urgent meeting of stakeholders” to discuss the crisis and prevent the threat of losing millions of dollars.
Official statistics show that 20 000 hectares were planted under irrigation and the crop is under harvest and curing has begun.
The yield of this crop is 76m kilogrammes (30% of national production), with a gross earnings of US$300m (40% of national value).
“For effective curing and handling of this crop, 24 hours of continuous power is required on tobacco farms. Currently, farms are getting on average seven hours of power per day, barring any faults, which is 30% of requirements from the utility,” the tobacco association said.
This implied that a staggering 70% of the required power has to be generated on farms through the use of generators and consumption of large amounts of diesel, the tobacco growers said.
The ZTA said not all areas have received good rains and there is an increasing requirement to start supplementary irrigation of the early dryland crop.
This requires a stable power supply from the utility which is not present.
It emerged that from January onwards, curing processes increase and there will be further demand for consistent power and close to 50% of the national crop could be exposed if the much needed electricity is not available.
Tobacco is Zimbabwe’s fourth largest foreign currency earner. At the close of the 2022 marketing season, a total of 212,711,370 kilogrammes of tobacco had been sold at a value of US$650,308,534.
Speaking on the Finance Bill in the House of Assembly, Budget, Committee chairperson and Buhera Central legislator Matthew Nyashanu said the power cuts have contributed to already existing economic challenges in the country and the ZWL$4.5 trillion budget presented by Finance Minister Mthuli Ncube ought to have addressed that.
“The economy however faces a number of challenges, which include erratic supply of key enablers such as electricity and water, deficiencies in delivery of social and other public services and slow implementation of value addition initiatives,” he said.
He added the committee was concerned with the non-uptake of energy projects by licensed Independent Power Producers (IPPs) despite the crippling power shortages being experienced in the country.
“This is attributable to the uneconomic tariffs being charged by Zimbabwe Power Company. The committee urges ZPC to pay the same tariff they pay for power imports to local IPPs so as to promote local production which creates jobs locally.”
“The Committee is disturbed by the willingness of Government institutions to pay equilibrium prices for imports while paying sub economic prices for local suppliers. The same can be noted for maize producer prices.”
Confederation of Zimbabwe Retailers president Denford Mutashu said the power crisis has added to the woes already affecting the country.
“We have stability as a country now but we need now to focus on moving towards a growth trajectory despite setbacks like the COVID-19 pandemic, the Russia-Ukraine geopolitical crisis, the inflationary pressures that ravaged the economy due to speculative pricing models as well as the unstable exchange rate,” Mutashu said.
“Power supply challenges also took centre stage but we have been assured that the sector will be liberalised,” he added.
Business has warned that the deepening power crisis and resurging runaway parallel market exchange rates are threatening Zimbabwe’s economic growth amid fears that some companies have closed businesses owing to acute power shortages.
Experts said though the Finance Minister Mthuli Ncube made projections on possible economic rebound, all that may be affected if the power crisis is not addressed immediately.
“As long as these difficulties are not addressed, those growth projection numbers will be cut downwards,” the Confederation of Zimbabwe Industries president Kurai Matsheza said.Economist Gift Mugano said the power outages are hitting the economy so hard that businesses are failing to cope with disruptions.
“It’s so obvious that we can’t stick to 4% economic growth projections as many businesses have cut operations from the first week of December due to rolling power cuts.
“This means that production levels are going to be heavily affected and the industry’s capacity utilisation is going to be hit hard,” Mugano said.
“We are at the peak period where there is huge demand and we are not producing enough, certainly with this kind of scenario the economy will shrink.”
“Electricity is one of the key economic enablers and has pass-through effects on the prices of goods and commodities as those who wait until odd hours will see their workers charging over time with those who can afford generators increasing prices to cater for that extra cost.”
The government recently approved the upward review of US$0.1221 per kilowatt hour (kWh) from the current US$0.08 per kWh for electricity to be available, but with low levels of Zambezi and old machinery at various thermal power stations, power cuts are here to stay.
Zimbabwe National Chamber of Commerce president Mike Kamungeremu said the authorities have to find a long-lasting solution to electricity challenges to meet their economic targets.
“With no permanent solution to the power crisis, the economic projections targets will be hard to meet as disrupted production will lead to reduced capacity utilisation for the industry and shortages in the market,” he said.
Some companies are said to have cut their production capacity by 30% owing to crippling power outages.
As of yesterday, the ZESA power generation unit, Zimbabwe Power Company generated 515MW against a national peak demand of 2200MW.
Zimbabwe imports electricity from South African power utility, Eskom, Mozambique’s Hydro Cahora Bassa and ZESCO of Zambia to cover for the gap.
Exacerbating the situation is that Eskom and other regional power utilities are also suffering from electricity insufficiency, making it difficult for them to supply Zimbabwe.
