By Dorothy Moyo | In a concerning turn of events, Zimbabwe is teetering on the brink of a major power crisis, casting a shadow over government promises of reliable electricity supply. The dire situation has come to light with revelations that the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) is burdened by a staggering debt exceeding US$60 million, stemming from the newly commissioned Hwange Unit 7 & 8 power plants.
Hwange Units 7 & 8, crucial sources have disclosed, were constructed under contracts based in US dollars, with significant private foreign investments fuelling the expansion endeavor. Disturbingly, it has been disclosed that ZETDC is currently purchasing electricity at a rate of US$0.12 per kilowatt-hour, yet selling it to consumers at an average cost of US$0.10 per kilowatt-hour—below the cost of production.
The combined power output of these units stands at 600MW, with the entire project incurring a colossal cost of US$1.5 billion, carried out by Sinohydro Corporation. Importantly, Zesa, the Zimbabwe Electricity Supply Authority, is obligated to pay Sinohydro in foreign currency for Hwange Units 7 & 8, while consumers pay in local currency. This tariff disparity has resulted in unsustainable financial strains, with many consumers, particularly local authorities, unable to meet their obligations.
The situation has the potential to strain relations with Chinese contractors, as payment defaults loom large. Currently, Zimbabwe’s power utility is importing a mere fraction of its previous supply from Mozambique, a decline from 200MW to approximately 10MW, due to outstanding debts. Furthermore, Zambia’s Zesco has ceased the supply of 100MW to Zimbabwe, citing poor contract performance.
The national power utility is grappling with debts exceeding $150 billion from consumers, including local authorities. Analysts argue that a tariff review is imperative to enable ZETDC to secure electricity imports and bridge the alarming supply and demand gap. The current tariff structure is deemed inadequate to support the nation’s economy.
This precarious situation poses a severe threat to Zimbabwe’s social and economic development, as energy is a driving force behind progress. The chronic shortage of a reliable power supply could lead to substantial economic losses.
Energy and Power Development minister Edgar Moyo has acknowledged the gravity of the situation, emphasizing the need to eliminate load shedding. He called for prioritizing productive sectors and transparent communication in the implementation of load shedding schedules, underscoring the urgency of addressing this looming crisis.