The Chamber of Mines of Zimbabwe revealed that they are engaging the Zimbabwe Electricity Supply Authority, (ZESA) over the increased exporter’s tariff from USc9.86kWh to USc10.63/ kWh with effect from 1 August 2022.
Speaking to Great Dyke News 24, Chamber of Mines of Zimbabwe Chief Executive Officer Isaac Kwesu said they are yet to respond to ZESA concerning the issue adding that they are holding meetings with stakeholders to solve the issue.
“We are yet to respond to ZESA on that letter, unfortunately it will be premature to give a response to the public before responding to ZESA.
“We are having our meeting as the mining industry, caucus meeting to gauge the impact to the information on how best we can engage ZESA based on its impact to the industry.
“All I can confirm is that we received the letter this week and we are trying our best to engage ZESA, ZERA and the government at large because the issue of tariffs is not custodian to ZESA but it has to be approved by certain institutions and the government including ZERA.
“We are yet to start engaging, and we’ve been studying the letter and we’ll issue a public statement. In the meantime I don’t have much information to share.
“What l can say is it’s an urgent matter and we will do everything possible to make sure that we engage with our authorities on time,” he said.
The response comes after a letter addressed to the Chamber of Mines of Zimbabwe, by the ZESA Executive Chairman Dr.Sidney Gata revealing that there is incapacitation of operations due to inadequate operational vehicles, machinery and spares resulting in deferment of operation and maintenance activities on the transmission and distribution network.
“The supply-demand gap is growing at unprecedented rates driven by a mining economy which is targeting USD12 billion annual production by 2023. The increase in mining industry demand is also inducing other significant industrial loads.
“ In the past year, ZESA received firm applications for new supply and for current capacity increases from mining and smelting customers alone, aggregating to 2 100MW of additional load by 2025.
“ZESA is under immense pressure to settle the ballooning power import debt. ZESA had secured an Afrexim Bank facility which it used to pay off the power import debt in February, but the debt is growing back exponentially, posing a threat on security of supply.
“ZESA has been charging an average tariff of USc9.86/kWh for exporting customers other than Ferrochrome smelters, which however is below cost and hence has been failing to capacitate the Utility to ensure security of power supply and efficient service delivery.
“At the current tariffs ZESA is failing to refurbish the generation, transmission and distribution network so as to improve on service delivery.
“Electricity supply is in dire shortage not only in Zimbabwe, but also throughout the SADC Region, as evidenced by ESKOM’s current Stage 6 Load Shedding Status,” he said.
He added that since January 2022, ZESA has failed to draw from supply contracts with neighbouring power supply authorities because of shortage of funds as ZESA tariffs cannot sustain the import arrangements.
“The power import contracts which ZESA had negotiated will not be available beyond end-July 2022. ZESCO has been spinning the energy it had allocated to ZESA at a huge loss of USD 6.3 million per month since January 2022, due to ZESA’s failure to pay for it.
“ESKOM is in unprecedented trouble with over the same contracts ZESA had secured.
“ZESA now has up to 31 July 2022 to draw the supply or else the contracts will be cancelled and the supply re-allocated to other utilities in the SAPP. Zimbabwe will stand to lose heavily as these contracts are long term, and at a competitive price.
“After studying the various parameters as Operator, distinct from Consumer, ZESA realized that the Utility and the shareholder are exposed to a commercial and trading risk which they have no capacity to underwrite or mitigate,” he added.
The southern African country generates an average 1,200-1,300 megawatts of its own electricity and relies on imports from Zambia, South Africa and Mozambique to cover shortfalls. ZESA requires $17 million monthly for those imports.
Zimbabwe, which has the world’s third-biggest reserves of platinum-group metals, and also mines gold, diamonds and chrome, is targeting growth in the sector to $12 billion output by 2023.