MINISTERIAL STATEMENT
STATE OF THE ENERGY SECTOR
THE MINISTER OF ENERGY AND POWER DEVELOPMENT (HON. CHASI): I wish to thank the House for this opportunity to give a statement on the state of the energy sector in the country. Mr. Speaker, I believe that this is a very serious matter which is of immense public interest and I would plead that Hon. Members give me the opportunity to deliver my statement without undue heckling. I want to start Mr. Speaker, by saying that the energy sector is as good as the governance that we have got over it. I am going to be speaking about this in more detail later on in the speech but I want to start by ensuring that we are all at the same level regarding roles and responsibilities.
I want to speak about the Energy Regulatory Authority Act of 2011. This is the Act that creates the regulatory board that we commonly refer to as ZERA. This Act contains in Section 4, a panoply of mandates for ZERA, in fact about 18 of them. The responsibilities of this authority range from importation, transmission, distribution and many other aspects of the petroleum industry. ZERA is given unfettered power to preside over this industry. I also want to say that the same law requires that as ZERA does its work, it must not be subject to direction by anybody. I want to underline that anybody also refers to me as the Minister responsible for energy.
I also want to state my role as Minister of Energy and Power Development so that Members understand and are clear. The law also stipulates that the role of the Minister is simply to issue general policy direction. I have given this preface so that the Hon. House is very clear as to what is expected of me and what is expected of ZERA itself. In broad terms, I have clarified the role of ZERA and the role of the Minister – [HON. MEMBERS: Inaudible interjections.] – Please, excuse me I cannot speak.
THE HON. SPEAKER: Hon. Minister …
HON. CHASI: They are distracting me …
THE HON. SPEAKER: No, no – [HON. MEMBERS: Inaudible interjections.] – Hon. Minister, cool down.
HON. CHASI: Mr. Speaker, I have given the background relating to the law because I intend to be legal in everything that I am going to be doing.
Mr. Speaker, I want to underline that regulation is about law and I want to apply the applicable law. I also want to state that the problem we have in this sector arose from disrespect for the law, lack of corporate governance and I will be able to demonstrate that as I go through the statement. I then want to say having identified that problem, because I have read a lot about each of the parastatals, it is quite evident to me that whether structure or foreign currency is in place we will not be able to sort out the issues at hand unless we deal with the issues of corporate governance.
As a result Mr. Speaker, it is necessary that we carry out a review from a corporate governance point of view of each and every parastatal that is under the ambit of the Ministry to examine whether we have adequate and proper skills within the board, and also skills within management of the parastatals. The country’s vision in this area is to achieve universal access to sustainable and modern energy in Zimbabwe by 2030. The mission is to ensure the provision of adequate and sustainable energy supply through formulating effective policies and regulatory framework. For those who may care to know, these are the pieces of legislation that are relevant to the sector which I would urge those with an interest to be familiar with – the Electricity Act, the Energy Regulatory Authority Act, the Rural Electrification Fund Act, Zambezi River Authority Act and the Petroleum Act.
I also want to take this opportunity to inform Hon. Members of the various policies and plans that are in place in this particular area. We have got the National Energy Policy Act of 2012; the Independent Power Producers Policy which is actually under development; National Integration Energy Resource Plan which we have commenced work on; Rural Energy Master Plan also under development; National Renewal Energy Policy which we intend to launch in the not too distant future; then the National Bio Fuels Policy which we also intend to launch in due course.
Performance of the Power Sector – I want to make reference to current electricity supply status; the situation of electricity in the country. I want to draw the attention of the Members here present that the situation is dire and that as a nation, we must be strategic in our planning for energy and also its use. The electricity sector is currently dominated by State owned power generating transmission and distribution companies; Zimbabwe Power Company and Zimbabwe Electricity, Transmission and Distribution Company. ZPC has a total of five power stations in operation. I have attached a table there so that when this is circulated, Members will be able to see but these are basically Kariba Power Station, Hwange Power Station, Harare, Munyati and Bulawayo Small thermals. All in all, when fully operational, this gives us 2 260 mega watts.
Mr. Speaker Sir, the hydrological condition of Kariba Dam has been the subject of discussion of late. As of last week the dam was 32%, and as of Monday, it had dropped to 29%. So, we can all do the mathematics involved in that to show and understand the problem at hand in terms of reduction of water levels at Kariba. If that trend continues at that pace, this means that in theory, within 14 weeks, Kariba will not be able to deliver power. This means that those who were responsible at ZESA in particular, ought to have understood the magnitude of this problem and taken steps to plan for it in accordance with the issues at hand. I will speak to that later on.
I now move to Independent Power Producers – a number of IPP’s also generate electricity to feed on to the national grid. These include sugar and ethanol producers that primarily generate for own use and sell excess to ZETDC. They include Hippo Valley, Triangle and Green Fuels. These sugar producers are also net importers of electricity. Their installed capacities are shown in the diagram that I have here, but all in all, it is about 136 mega watts arising from IPP’s.
If I move on to actual electricity demand and supply profile and I think this is very important for us to understand the implications of what is happening and what may happen in future regarding power and then the overall impact on our economy. Zimbabwe’s current average internal electricity generation is about 1200 mw. The country’s maxim demand is estimated at 1 700 mw giving a supply demand gap of about 300 to 500 mw at maximum which is usually met by exporting from ESKOM and Kabora Basa of Mozambique.
So, I want to empasise that we have got a gap in terms of availability of power versus what we consume every day. The challenges and proposed mitigation measures – the country is currently faces with a power supply deficit which has seen some of the ZESA customers being load shed for as long as 10 hours and in some instances, I have had complaints from members of the public that they have gone beyond that time which exceeds the time that may have been stated in the schedule by ZESA.
This deficit is due to a combination of factors some of which I now turn to: – Receding water levels at Kariba Dam. I think I have already made it clear. This has resulted in the Zambezi River Authority now rationing water between Zambia and Zimbabwe. There is an arrangement between us and Zambia regarding management of water on the Zambezi, so, further depleting water that is available for generation of power. So, each of the two power stations in other words, the Zambian one and our own, are now allowed water enough to generate an average of 358 mw per day, much reduced from what traditionally has been available.
An improved rainy season in 2017/18 saw the water allocations increased to allow each power station to generate an average of 480 mega watts per day. Currently, the receding water level at Lake Kariba has resulted in the sealing down of power generation in order to comply with reduced water allocation by the Zambezi River Authority. The reduced power generation has resulted in load shedding and I am sure all of us are familiar with it and its effects. In order to match power supply demand, load curtailing as it also know by others, is currently averaging 350 mega watts and we expect this amount to rise to 600 mega watts in June, given that it is going to be very cold and people will begin to use heaters and other warming devices which may include electric blankets and all. The peak that causes us to load shed and I know that there are many misunderstandings about load shedding; it is a very tortuous decision to make but it is a necessary one that has got to be done. The peak arises from about 6 to 9pm at night, when people get home, all the lights are switched on, the stoves operate, televisions and so forth. The increase in our consumption on any day is so significant that, I want to appeal to all of us here within our own families and our own constituencies to do whatever we can to conscientise our families and constituents to conserve power.
Performance of Hwange Power Station
Hwange Power Station is currently performing below its average due to its obsolete plant long past its life. This general comment is applicable to almost all the infrastructure that relates to the generation of electricity, which means that we must, in some instances, invest in maintenance and invest in new installations or renewable methods of coming up with power. The reduced power generation has resulted in load shedding in order to match power supply and demand. I want to emphasise that if we continue to consume at the rate that we are doing, if we continue to leave our houses with lights on all the time, Government buildings with lights on all the time, things can only get worse. If we continue to use bulbs that consume a lot of power, things can only get worse. There are things that can be done to make more power but there are things that we have to do to ensure that we are all responsible when it comes to consumption of power.
There are remedial measures Mr. Speaker, that we are working on as a Ministry to ensure that we save on power. It is very expensive, we are short of foreign currency so we cannot afford the luxury of just spending power having swimming pools running 24 hours and people never swim. Maybe they swim once in six months. We are not just going to concentrate on supply. Everyone, including those who are shouting must be responsible, first in how you consume electricity – HON. MEMBERS: Inaudible interjections.] –
THE HON. SPEAKER: Order, order. It will help Hon. Minister, if you run through your written Statement so that when there are issues arising, we can expand on the Ministerial Statement.
THE MINISTEROF ENERGY AND POWER DEVELOPMENT (HON. CHASI): As you please Mr. Speaker Sir. I have dealt with the performance of Hwange. We have challenges there due to obsolete equipment. We need to put more power to make sure that it is operating at full throttle. I also want to deal with thermal power. We rely on coal and we do have coal supply challenges. Currently, ZPC is receiving coal supplies from two main suppliers, mainly the Hwange Colliery and I do not need to repeat the state regarding the state of that entity and its capacity. The other one is Makomo. The company also receives much smaller quantities from Zambezi Gas. Of late, the thermal power station or power stations were facing coal supply challenges due to liquidity constraints, pricing as well as foreign currency shortages. The price of coal was recently increased from $326. 50 to RTGS$886 per metric tonne in order to address the concerns of the suppliers.
Reduced Electricity Imports
Zimbabwe is a member of the Sothern African Power Pool (SAPP) and is interconnected to all its members. Further, it is located at the regional geographical centre, making it the hub for power trading in the SAPP network. ZETDC has power purchase agreements to trade electricity with ESKOM of South Africa and HCB of Mozambique. The shortage of foreign currency in the country has had a negative bearing on electricity supply as ZETDC is struggling to meet its electricity is approximately $830 million. As a result, of this, importers are reluctant to supply electricity to Zimbabwe and ZETDC is currently getting very minimum imports from outside. Zimbabwe is also exporting 80 megawatts of power daily to Namibia in fulfilment of a loan used to fund ZPC’s contribution to the funding of the Kariba South Extension Project as required by the main financier, China Exim Bank.
Electricity Infrastructure Vandalism
This Mr. Speaker, is going to be a key determinant in the success or failure of the generation of electricity in the country and its distribution to the public. Electricity infrastructure vandalism has also contributed to a number of areas having no access to electricity in the country. Transformers are being stolen daily and there is a deficit at the moment. I am told of 2000 transformers that were stolen that need replacement. These transformers are not cheap and are as much as $50 thousand each. It is necessary to take action to stem the thefts that are occurring
Intervention measures in the power sector
Load shedding is not a sustainable method to deal with the problems that I have spoken to. Load shedding is not sustainable for exporters that are earning the country’s much needed foreign currency and contributing to economic growth of the country. For every unit of unsaved power arising from load shedding of productive sectors, the country losses, according to research, $3.20 in its GDP. We have transformers that have gone missing in farming areas and now the thieves have moved to the high density areas where they are operating in groups and action needs to be taken.
However, there are quick win interventions in power imports from ESKOM and HCB. The power imports of up to 400 megawatts can be unlocked by a bankable plan to both ESKOM and HCB. The imports would securitise power supply for the exporting mines and industries and release power for the other customers, some of whom are prepaying. It is proposed that exporters pay their electricity bills in foreign currency in proportion to their foreign currency retention percentage. This arrangement is estimated to raise $11 million against an estimated bill of $14 million per month.
A Statutory Instrument to this effect is being considered. The foreign currency generated would go towards meeting the current power import bills plus a portion for the amortisation of arrears. In addition, a portion would be used to fund the procurement of critical generation spares to sustain output of the old Hwange Power Plant. Critical transmission, grid stabilisation and distribution spares such as transformers, prepaid metres and so on, would be also funded from these inflows.
The replacement of 2000 vandalised transformers would see power restored to over 25 000 customers that have gone for long periods without electricity. These include schools, clinics, growth points, farms, businesses and domestic points.
The Hwange power station expansion flagship project whose groundbreaking was commissioned last year is under consideration and will remain on track including repayments for Kariba South Extension. An urgent support bail out of RTGs 63 million monthly from Treasury is required to enable ZETDC to continue supplying electricity to the nation and support economic activities. This will cover the funding gap created by the absence of a tariff adjustment which recognises the monetary policy and introduction of the interbank market to cover foreign currency purchases.
With the current tariff, ZETDC is collecting between RTGs 60-70
million against a monthly budget of RTGs 130 million to cover the bare essentials. ZESA is technically solvent and I am sure Hon. Members are fully aware of this. It is struggling to fully fund operations. The severe cashflow crisis being experienced would see operations grinding to a hault in the not too distant future, unless support is rendered as the funding gap increases every month cumulatively, as people fail or decide not to pay the bills. The price of critical generation consumables has increased by an increase of 250%. Coal suppliers at the moment are agitating for a price review. Import duties should be exempted. We submit on diesel for power generation and importation of critical spares for the generation transmission and distribution networks.
Overtime, once stability in the economy has been achieved, ZESA can be allowed to have a staggered approach to increasing tariffs in order to achieve cost reflectivity or in sync with economic activity. There is need to review the tariffs in order to cater for inflation and make the tariff cost effective. We have a number of priority projects that need to be executed diligently. In order to address the power deficit in the country, a number of priority projects are at different stages of implementation by ZESA. I will just mention the names of the projects:
Hwange Power Station Expansion Unit 7 and 8, Bulawayo Power Station repowering.
We also have candidates of projects that we would like to pursue with vigour in view of the dire situation that we face on the power side. These are the Gairezi Mini-hydro, the Batoka Hydro Electric scheme, Mutare Peaking, Insukamini Solar Power plant and Harare Thermal Power repowering.
There are also a number of transmission projects. Several projects are lined up to reinforce the grid and boost the country’s transmission grid’s capacity for wheeling power to enable it to perform its key role in the regional power trade. The list includes Zizabona and Mozisa interconnectors, the Alaska-Sherwood, Alaska-Karoi and Orange Groove-Triangle lines. Currently ZESA is in the process of securing funding for these projects. Prepaid meter project is also currently being implemented to enhance revenue collection by ZESA which will help in sustaining operations.
We need to put emphasis on demand side management. As I averted to earlier on, we need to deal with matters of energy efficient lighting. The Ministry will be promoting the use of energy efficient light bulbs (LEDs) in order to reduce demand in buildings and at household level.
We are also going to be promoting solar water heaters in place of electric geysers for water heating. Statistics compiled so far indicate that from January to April 2019, up to 3000 solar geysers had been installed. There is meaningful progress being made but we need much more than this if we are going to save on power.
Ripple control of electric geysers – using the ripple control system, ZESA is able to switch off electric geysers at night and during the peak periods in order to reduce domestic demand. This will help manage electric demand in the morning and evening peak periods.
We intend to launch a Switch off Switches (SOS) campaign that will sensitise the public to save power.
Let me now turn to the fuel supply situation. Generally, the fuel supply situation remains constrained due to what we believe is panic buying on the part of consumers. Because of panic buying, not all service stations have fuel at any one time – [HON. MEMBERS: Inaudible interjections.] –
THE HON. DEPUTY SPEAKER: Order Hon. Members.
HON. CHASI: This results in queues at service stations that may be having fuel. The market is receiving reasonable volumes of fuel to keep the country running. Panic buying originates from speculations that fuel prices are going to increase sharply. Some fuel retailers actually make unilateral increases to such levels as we had in the past week.
On bonded fuel stocks, the country always has fuel stocks at NOIC’s bonded storage in Msasa. This fuel belongs to international oil traders and does not belong to us. It is fuel that is stored there for ease of access.
The country continues to blend petrol with ethanol in accordance with the law. The blending ratio varies, depending on the availability of ethanol on the market.
Interbank foreign exchange rate – the Reserve Bank of Zimbabwe had been providing foreign currency for fuel procurement even after the parity between the US$ and the bond note had been removed. However, the system as Members are aware has now been changed to the interbank rate. Oil companies are now supposed to access foreign currency at the interbank rate. Even the letters of credit for fuel procurement are now priced at the interbank rate as pronounced by the Reserve Bank.
The interbank rate also applies to ethanol. The price of ethanol was last pegged in 2016 when the parity between the US$ and the bond note was still in place. After removal, the producers of ethanol obviously seek to have that revised.
Challenges in the petroleum sector – the main challenge is shortage of fuel on the market. The efforts being made to ensure fuel availability include: issuance of letters of credit to oil companies by the Reserve Bank for fuel procurement, negotiating with international oil traders for long term fuel supply arrangement, curbing malpractices in the industry compound the challenge by causing artificial shortages of the fuel and enforcing discipline in the consumers to stamp out or minimise fuel boarding.
Fuel Price Fluctuations
The other challenge is related to fuel price fluctuations. In the past, fuel price changes were caused mainly by the changes in the price of fuel on the international market. Such changes were usually minimal. Now the Interbank Rate, at least up to the time it stabilizes, will also be causing fuel price changes. Currently, the changes are upwards and more significant than the price changes caused by the international prices of fuel.
To curtail the fluctuations in the short-term, the Reserve Bank will hold the fuel exchange rate constant for two weeks. In the long term, the Ministry will be proposing a Fuel Stabilisation Fund which would act like a subsidy to cushion the consumers from acute fuel price increases. Legacy Debt
Due to foreign currency constraints, the oil industry has accrued a huge debt for fuel supplied in the past. This resulted in the oil companies being unable to extend further credit, preferring to be paid up-front. Given the foreign currency challenges that the country faces, it is proving difficult to pay upfront for enough fuel to meet demand, hence the establishment of Letters of Credit for current consumption.
The Ministry continues to engage the Reserve Bank to come up with modalities to extinguish the debt. The oil companies also continue to raise concern over the issue. Their view is that Government is focusing only on paying for new suppliers, ignoring the legacy debt.
Promotion of New and Renewable Energy Sources
The country has abundant Renewable Energy resources that have largely remained untapped, especially for large scale power projects. These include solar, biogas, biofuels and wind energy sources. The Ministry seeks to increase the share on renewable energy sources in the supply mix. In order to accelerate the uptake of renewable energies, the Ministry has completed the drafting of two key policies.
Current state of Renewable energy projects
Several renewable energy projects are underway as detailed briefly below:
(a ) Mini-hydro power projects in Eastern Highlands are contributing more than 30 MW to the national grid. ZESA has already engaged a contractor to develop the 30MW Gairezi mini-hydropower plant and ZERA has licenced a reputable IPP to develop the 15MW Tugwi-Mukorsi mini-hydro power station. Detailed feasibility studies and technical designs are underway.
(b) The rural Electrification Fund has distributed solar mini-grids to schools, police posts, business centres and rural clinics.
(c ) The Rural Electrification Fund is promoting Biogas Digesters for institutions and households. To date, more than 60 institutional (large scale) digesters and numerous domestic digesters have been built. In addition, more than 80 builders have been trained to construct biogas digesters.
(d) The Ministry is also promoting the adopting of solar water heaters. Since January 2019 to date, records show that more than 3 000 solar geysers have been installed. The Ministry aims to promote the installation of more than 250 000 solar geysers by 2030.
(e) The Ministry is also promoting solar street lights. This is evident in Harare, Chinhoyi, Beitbridge and other local authorities. To date, more than 1 200 solar lights have been installed countrywide.
(f) Working closely with the Internatinal Renewable Energy Agency IRENA), the Ministry has developed a Solar Atlas for Zimbabwe and has also identified sites that are suitable for developing wind power plants. Going forward, the Ministry intends to go to tender for wind power plants at these sites.
(g) The Ministry is also keen to accelerate the development of 3 x 100MW solar projects at Gwanda, Munyati and Insukamini.
Licensing of Renewable Energy Projects
The law allows private players or IPPs to generate additional power to the grid. These projects have faced a number of challenges such as: inability to reach financial closure, currency risks and profit repatriation issues, requirements for risk mitigation through Sovereign Guarantees and limited capacity of the local financial sector to finance the projects.
Going forward, the Ministry will continue to engage Treasury on financial risks and guarantee issues, migrate from Unsolicited Energy Auction in order to attract cost effective projects and also streamline and improve licensing procedures among others.
Renewable Energy Policy and Biofuels policies
These policies have been submitted to Cabinet for approval. Primary objectives of the Renewable Energy Policy include setting of overall targets for renewable energy, promoting investment in the renewable energy sector by providing specific incentives; providing National Project Status to all the renewable energy projects, recommending of Prescribed Asset Status for renewable energy projects and specific incentives for promoting third party sale of power.
In conclusion, as articulated above, it important that we must have an effective corporate governance framework for all the players that are in this field. Significant investment is required in Zimbabwe’s Power and fuel sector in order to make the country self sufficient and thereafter export energy products. My Ministry welcomes investment in this sector and will continue to work on policy frameworks to make the investments viable, but of importance Madam Speaker is the fact that we would like all information that investors would need in order to decide to invest in this sector to be publicly available together with the attendant incentives.
Lastly, service delivery in energy sector like the other sectors of the economy is also severely affected by foreign currency challenges. Going forward we expect to see a highly disciplined sector that is regulated properly with provisions of a self regulation where that is applicable. I thank you.
HON. GONESE: Thank you very much Madam Speaker Ma’am. I have points of clarification from the Hon. Minister, in particular in relation to issues of the price when it comes to fuel. I know he just mentioned that this is related to the interbank rate and I appreciate that. However, Madam Speaker Ma’am, there is one aspect which the Hon. Minister did not advert to. I know that this is under the direct purview of the Hon. Minister of Finance and Economic Development but the Hon. Minister of Energy and Power Development being responsible for this very important issue, when it comes to the issue of price, there is a factor which I think the Hon. Minister should address his mind to. I want to find out whether he has done so.
Has the Hon. Minister looked at the impact of the duty which is levied on fuel and this is money which goes to Government? The Hon. Minister must be aware that prior to the increase of the 14th of January 2019, the duty on fuel was about 46 cents and prior to that it was actually the highest in the region.
In view of the difficulties and economic challenges which the people of Zimbabwe are going through, has the Minister considered making representations to the Hon. Minister of Finance and Economic Development that duty be scrapped completely? Because, when you look at the price of fuel and the impact of the interbank rate, and also the ripple effects that it has on pricing in general, is this not something which the Hon. Minister should be addressing his mind to, that duty should be scrapped completely or at the very least, that it be put back to pre-14th January levy which is about 46 cents? That is my point of clarity which I want the Hon. Minister to address.
HON. NDUNA: Thank you Madam Speaker Ma’am. I have just six points of clarity. The Hon. Minister spoke about 1 500 solar street lights and this is quite applaudible. Would he therefore, given that scenario, not request the Minister of Finance and Economic Development to get the solar systems, solar gadgets and infrastructure duty free in order to make sure that we use what we have to get what we want without further taxing the unsuspecting users of power?
Then the second one, the Hon. Minister spoke of vandalism. I am quite alive to the fact that at some point ZESA used to connect 600 000 customers and by this time it could have connected 1200 000 customers but due to vandalism of copper gadgets, transformers and the power lines, we are still at 600 000 users. We could have elongated or made sure we increased the capacity of the users. I ask therefore, that in conference and in a tete-a-tete with his counterpart, if they can revoke the licences of those that deal in copper. If those licences can be revoked immediately because we do not have a copper mine. So, we should withdraw all copper licences Madam Speaker Ma,am. That is my suggestion.
The third one is, the Minister spoke of the shortage of diesel and fuel. It is my hope that the Minister can conference with his counterpart the Hon. Minister of Finance and Economic Development and see reason in global fuel players coming to invest here in Zimbabwe because a lot of them can give any nation five years advance fuel and only request that they be paid after five years in hard currency. It is my hope that the Minister can see light in my intervention in order that we get these global fuel players coming to give us fuel currently and only recoup their monies after five years.
Fourthly, on the issue of governance that he spoke about in regulating the power sector, in particular ZERA; I ask that immediately there be a Statutory Instrument that gives direction to the primary Act that directs ZERA in its operations so that the Minister does not only get this oversight wishy-washy over ZERA but actually directs it in its operation. This is an organisation of strategic national importance for them to be like a board which is not appointed according to the dictates, interviews and interventions of Parliament like the Zimbabwe Anti-Corruption Commission where we as a country are having quite a big deficit. We want to make sure that the people get enough and optimum power. It is my clarion call that the Minister has a lot to do to be given powers in order to be involved in the power sector.
In the last point, the issue of parity has already been spoken to by Hon. Gonese. It is my humble suggestion that whilst we are finding mitigating factors or ways to mitigate this catastrophic limited supply of fuel, garages and local fuel suppliers here be allowed to import fuel duty free until the next rainy season. We know that we are going to have more power coming in because of the uptake of the water in the Kariba Dam. Because of that, we are then going to have reduced fuel usage. Our generators are not using fuel but whilst we are waiting for those rains, if they can be given duty free importation. It reduces the lack of availability, it reduces the prices of our fuel; if the two Hon. Ministers can also conference the Minister of Finance and Economic Development and the Hon. Minister of Energy and power Development, that currently and until such a time that we have enough power, generators be imported duty free.
These are my suggestions and the Minister is more than happy to take it or leave it, but I hope and pray Madam Speaker Ma’am, that those issues be taken on board.
HON. CHOMBO: Thank you Madam Speaker Ma’am. On your speech Hon. Minister, you indicated that there is supposed to be a culture change. That is one thing that you can control and the forex component you cannot and all the other things but there is supposed to be a culture change within the nation at large.
You mentioned that we have to limit the usage of electricity to just have at least one room lit, the types of globes that we use and even leaving the heaters on and so forth. I really want to know if you have any programmes that you have planned, like power service sensitisation programmes for the whole country for them to have that culture change and be able to appreciate their contribution. As you have said, it is not only you to be able to address this problem and yet it has to be everybody.
HON. CHASI: Hon. Gonese made reference to the issue of duty on fuel. I want to say that as a general rule, we are in constant engagement with the Minister of Finance and the Reserve Bank of Zimbabwe, not only them but with everyone who is a stakeholder and a player in the industry. Today from 0700 hours I was meeting together with the RBZ Governor players in the industry and I think that as we continue with that engagement we are going to be making significant progress.
There are references to solar lights being duty free. I think those are matters that will also be covered in the insensitive and there are already some incentives for the promotion of solar power. Vandalism, as I indicated we need to take a very serious view of what is happening and I want to underline that fact that it does not matter what we do in this sector. If vandalism continues at the rate at which it is going we will not be able to get all those who should be having power to get it.
There has been referencing to licensing for copper. This is a problem and we believe that the ubiquity of these licenses is creating an opportunity for people to steal copper from the transformers and export them legally outside. We are also going to be reviewing the penalties and making proposals to make amendments to the law regarding possession of copper. Those found in possession are not receiving sentences that are deterrent in-so-far as we are concerned, given the challenge – [HON. CHIKWINYA: 10 years?] – possession.
Now, Hon. Nduna spoke about governance. I did speak to this when I began to say that everything has got to do with governance and that as a Ministry, we are focusing on governance issues in all the parastatals, particularly ZESA for the reasons that I believe are notorious. I believe that the last issues pertaining to parity and generators being duty free and so forth are matters that my colleague, the Minister of Finance and I can deliberate upon and see what can be done on that front to ensure that we get continuous service.
Hon. Chombo has made reference to culture change. To be quite frank, the only way that we can control or influence conduct as Government is if we come up with specific laws that will either encourage or discourage something. But as I said earlier on, it is incumbent upon members of this House and everyone in this country to consume power responsibly. We of course have ideas on what we should do to further deal with the demand side of power. I thank you.
HON. MUSHAYI: On a point of clarity, the Hon. Minister has highlighted the shortage of fuel and procurement as the challenges that we face in the fuel sector. My question to him is, in February, 2019, the then Minister of Energy said that we had procured 24 months supply of fuel in the country. The question that I ask which arises out of it is that we were lied to as a nation. Where has this fuel gone because we could not have consumed this fuel in four months? Lastly, he also said that he had seen evidence of payment towards the procurement of that particular fuel. Where has the foreign currency gone?
HON. MUSABAYANA: My question of clarity to the Minister of Energy and Power Development is in light of the dire fuel situation that is obtaining in the country. What is the Ministry doing to ensure that there is equitable distribution of fuel to farming communities or those remote areas since he has said that his Ministry is working towards universal access to sustainable energy supply because we have areas like Wedza that have not had fuel in service stations for more than six months?
Hon. Minister, the other question that I have is on the issue to do with the President’s vision of 2030. The President is very upbeat about the Vision 2030 and I am asking for clarity from the Hon. Minister if we have an energy and power infrastructure development strategy that spans 15 to 50 years so that it feeds into the President’s 2030 vision.
Madam Speaker, gold, oil and sometimes the US$ are the three major commodities that are precious on the global market and these commodities are sometimes used as store of value. My question is – what is your Ministry doing to ensure that the fuel they procured is only for consumption by motorists and not kept as a store of value because there is a difference between the parallel rate and the interbank rate, meaning there is a gap for arbitrage. It means people can start to hoard and store fuel as a commodity or store value.
My other point of clarity is on the school of thought that says de-regulate the fuel sector and allow free market forces and only concentrate on subsidising critical and productive sectors like agriculture, public transport and Government operations so that it will relieve pressure on the excessive use or need for Government to source for foreign currency. So, I need clarification on that.
My last issue is on the demand side that we were talking about that we need to manage the demand side. I notice that Europe, Brazil, the Americans and some African countries like Botswana, including Zimbabwe are still using those bulbs that consume a lot of energy but do we have implementation of that policy because when you walk into shops, you still find these high-power bulbs in the shops. Where is the implementation to ensure that we serve energy? I thank you.
HON. RAIDZA: My point of clarity from the Hon. Minister’s Ministerial Statement is regarding the issue of solar installation on Government buildings. Would it not be ideal for the Ministry to power Government buildings and other public institutions as a way of encouraging the private sector to realise that it is possible to use conventional electricity as a stop gap measure taking into consideration the prevailing challenges that we are experiencing as a country?
The other issue that I did not quite understand is to do with bringing in investors in our solar industry as a way of avoiding the issues of Chivayo saga. We want to get clarity on what the Ministry is doing with regards to purchasing electricity from these investors rather than Government investing directly into activities like the ones of Chivayo? I thank you.
HON. CHASI: Thank you Madam Speaker. With reference to the issue that has been raised by Hon. Mushayi. I have not seen the statement that she made reference and really do not want to comment about it because I am not aware of that statement. As a result, I am unable to say that there was fuel that was bought or not – that is beyond me and is something that I am not familiar with.
Hon. Musabayana raised a very important question which I had occasion to discuss with the industry this morning – the rationalisation of distribution. I am advised that we have about 600 or so service stations across the country and as Government, we have an interest in ensuring that fuel gets to every corner of the country. We have noticed and agreed with stakeholders that we need a way of ensuring that there is rationalised distribution of fuel and at particular times like now when there is where there is a shortage. We also need to be sensitive to the economic activity that requires petroleum at a particular time. So an agreement was reached today that the regulator and players meet and come up with a framework that allows them to make informed decisions around where and what fuel should be delivered.
Store of value, this has been a problem and the prices of our fuel has generally been lower compared to neighbouring countries like Zambia. So we have had serious instances of mischief that we have requested that they be investigated – where people have been effectively getting foreign currency from our system, buying fuel and being paid outside the country. We were alerted to this development this morning and have asked that the players abide by the law and policies of the country and that they take the requisite steps to return the money.
On deregulation, I think that it is a debate that we can have for a long time – there are pros and cons about what we have at the moment. Which is why I made reference to possibilities of self-regulation by the players in certain instances but we retain the current legal framework in place. For example, one issue that I posed to them this morning was if you look at the challenges that developed at some point with regards to fuel coupons, we said that it was possible that as players, they could agree that those coupons could have been usable at various fuel stations but they needed to agree and come up with a code of conduct or Memorandum of Agreement (MOU) that allows and details how that is done.
The problem being, we have instances whereby people have prepaid for fuel but are not allowed to access the commodity even when it is available. There are also instances where service stations are refusing to accept anything else apart from the United States Dollar. We have pointed out the impropriety of that practice and that we would be keeping our fingers on it to check who is engaging in that type of practice.
The issue of solar energy in Government departments – I agree with Hon. Raidza regarding that. We need to make efforts to remove as much as possible consumers of power from the grid during the day, then they can move back onto the grid during the night. We believe that this is a key strategic matter that requires Government support. We need to attract investors to come and do this and it will also assist us even in the rural areas for people to begin improving on economic activities there. We would like to come up with a package of incentives, some are already in place and make them public – including the map that I referred to where it is optimal to have solar energy; then market this to investors both locally and internationally – that way, we will be able to improve not only on the levels of our power but also save on foreign currency.
HON. T. MLISWA: Madam Speaker, let me first of all take this opportunity to congratulate the Hon. Minister for being appointed Minister of Energy and Power Development. Hon. Minister, you said it exactly the way I would have said it and this is where the problem is. There are people, Madam Speaker, who are given foreign currency to buy fuel. The fuel industry is not a productive sector. They then sell fuel in foreign currency like he said and where does that foreign currency go? It goes to the black market – it does not go back to buy fuel. So clarity is sought that what then happens to these players who are receiving foreign currency from the Reserve Bank of Zimbabwe, sell in foreign currency but do not use this foreign currency to buy fuel or remit to the Reserve Bank? So the black market now thrives from that – clarity needs to be sought.
The other issue on that one, the Hon. Minister had an interview with the Zimpapers television station. He mentioned that there were cartels because we have got to hit the nail on the head – there were cartels. There are cartels in the fuel industry but people are not prepared to name them. How far have you gone as the new Minister in dealing with them? The day you will reveal these cartels to the President, that is the day the fuel industry will have sanity. Here, we are given an opportunity before we name and shame them, especially myself. I have them but you said you wanted to investigate. These cartels must be exposed.
The other issue is, what are you doing about people who are getting foreign currency to buy fuel and not buying fuel. It does not take a rocket scientist to say, we gave Hon. Mliswa $10 to buy things for $10 but I buy for $5. Arrest them, you have them. Why are we wasting time and why are people suffering because of a few individuals. We cannot allow a situation like that to continue yet we know who they are, yet the records are there with the RBZ. Let an investigation be done tomorrow and see the money given to these companies. Did they bring the fuel that is meant to come in? If not, let them go to Chikurubi because this country is suffering as a result of them. There is no debate there.
The other issue is, why we are allowing the Reserve Bank to keep giving money when we can allow these companies to bring in fuel. Total is an international company, Trafigura is an international company. They are all international companies. The only companies which would have to be exempted are indigenous companies but these are international companies Madam Speaker, making money outside. Let them use their own foreign currency offshore, bring in the fuel and it is liberal.
I do not know why we keep on blaming the RBZ and allowing the RBZ to remit the foreign currency, taking from the productive sector and giving to a non-productive sector. The Professor of economics here, Hon. Prof. Mthuli Ncube totally agrees with me that there is never any economy where you take from the productive sector and give to non-productive sector and expect anything out of it. I would want to hear how you expect that to happen.
The other issue is the ethanol given to Billy Rautenbach is for blending but the fuel is still costing more Hon. Minister, yet we are saying to be blending. Why is it that we have one white man who has monopolised ethanol?. What is so great about him? he claims that it is because he was on sanctions, how many blacks have been on sanctions in this country? Just because of one white man, who is he to destroy this sector? Who is he eating with? Who is he moving around giving monies to? We are tired. Billy Rautenbach cannot be bigger than this country and allow this country to suffer. The war veterans who fought for this country even suffer. He never went to war, he never held a gun but today he talks about sanctions. Who has not suffered from sanctions? What is so special about one man? Ethanol, Triangle can sell it cheaper but you closed Triangle and said Billy can do it. This is the corruption Hon. Minister you have to deal with.
My last question, how are you going to deal with these tendencies which have destroyed this country? I can tell you, the sooner you deal with them, you will be the most commended Minister in this country because you would have dealt with corruption. Fuel is critical in the stabilisation of the economy. The Minister of Finance sitting there, cannot be blamed for this, especially him being new in this system where there is so much corruption. He is equally shocked by the corruption which is there. No wonder why, when we are asking questions here, he cannot expose his colleagues. Corruption is rife in the industry, how are you going to deal with it? Thank you.
HON. CHIKWINYA: Thank you Madam Speaker. The Minister in his presentation split his presentation into two. He first made the power supply presentation and then the fuel supply presentation. I will try to package my points of clarity along that scale. First of all Madam Speaker, the Minister tries to disassociate himself from ZERA which is the Energy Regulatory Authority. Madam Speaker, ZERA is established in terms of the ZERA Act of 2011 as he said. That Act is superintended or administered by the Minister of Energy and Power Development, so the Minister cannot come to Parliament which deals with policy issues and say myself, as a Minister, have my own functions and ZERA has its own functions, no one must interfere with ZERA when yet he is the superintended of ZERA. What the nation expects from its elected leadership which is Parliament, which is the highest concentration of political leadership, is that we need answers on the ground. The Ministers and MPs are there to provide answers where ZESA is an implementing organ. Hon. Minister, what we need is a direction for ZERA to be able to provide the services as required in terms of the Act, according to the 18 functions that he told us.
The second issue is, according to Section 3 (2) (g) of the Constitution which says, ‘The principles of good governance which bind the State and all institutions and agencies of Government at every level include in (g) transparency, justice, accountability and responsiveness’. It is incumbent upon the Minister who is superintending these Government agencies to be responsive. We do not have power currently in the country and it is incumbent upon the Minister to be responsible. We cannot then be able to shift blame to other Government agencies that are under his ambit and then the Minister expects us to make him come clean on that. We need to respect the principles of our own Constitution as dictated.
Madam Speaker, the Hon. Minister gives shocking statistics. He says, as of Friday, Kariba was 29% full and it is left with 14 weeks supply of power. Madam Speaker, this is shocking. We have investment which is depending on power whose business plan are five years. We are only five months into the year and we are expecting power in the next two and half months to be depleted from minus 358 megawatts. Madam Speaker, we share Kariba power supply with Zambia. Zambia is currently producing two thousand megawatts a day, consuming two thousand megawatts a day. What is it that Zambians are doing which we are not doing? What is so special about the Zambians political stability or political set up which we do not have in Zimbabwe? The Minister must feel challenged that his counterparts in Zambia are able to deliver and we are failing to deliver. These are the answers which we need from him as a Minister.
Madam Speaker, I am happy the Hon. Minister of Finance is here. Only yesterday, he claimed that Zimbabwe currently sits at a surplus cash of US$100 million as expressed in RTG$600 million. We cannot celebrate as Members of Parliament and the nation to have a Minister who sits in Cabinet, chaired by the President, celebrating success of US$100 million and have a Minister of Energy coming to this House again and say we cannot import power. It cannot be. This Government is held by the principle of collective responsibility. That is why they have one Cabinet meeting. Lucky enough, to Hon. Minister Mutsvangwa, after every Cabinet meeting, she comes out to give a collective Cabinet decision making matrix. We cannot celebrate silos of decision making to say, the Minister of Finance is doing good. He has surplus but the Minister of Energy cannot be blamed because there is no foreign currency, we cannot. We need energy as a matter of urgency in our households.
The other issue that I need clarity on is that what happened to the Gwanda Solar Project? Are we sure that we can sit here, proud to have alter ego of representing our people and then the whole nation of 17 million can be duped by one individual who ate $5 million and only managed to build one-roomed cabin which is equivalent to Mbizo maME. The Minister must come clean on what happened to the Gwanda Solar Project.
Madam Speaker, I will move over to fuel and there are only a few issues. The Hon. Minister was appointed on a Thursday, the Wednesday before I, Settlement Chikwinya had asked his predecessor Dr. Jorum Gumbo a very simple question, when can Zimbabweans drive into a garage, access fuel and drive out? The answer given was that in the next few days because Government at that particular day had issued 18 million LCs. I think his answer was so wrong to the extent that the President saw it fit to remove him from office. He then appointed Hon. Chasi. The same question is before you Hon. Chasi – when can Zimbabweans drive into a garage, fill in their tank and drive out, pass through KFC buying 2 piecer chicken? When can we have such a scenario? This is your mandate and this is all what the people of Zimbabwe want.
The other issue is, what are we doing about alternative sources of energy like gas? The President went to Lupane and officially opened the Lupane gas project. What is happening to it? We must be able to provide alternative sources of heating energy. Currently we are importing gas. If you go to Zuva at Fourth Street, gas is being sold at RTGs 9.70 per kilogram. It is beyond the reach of many but I am sure if we are going to tap our gas from Lupane, it can lend cheaper. What are we doing about gas?
My last point is on ethanol. Statistics have shown that if we import ethanol from Brazil for blending purposes, it lends at RTG 0.50 cents per litre but Billy Rautenbach from Chipinge – 400 km away from here is lending it at RTG 1.70 per litre – [HON. MLISWA: That is so corrupt. Who is Billy?] – Why are we then blending? Is South Africa or Zambia also blending? If they are blending, how much is it?
As what Hon. Gonese said, may the Hon. Minister tell us that in percentage terms – if we are going to cost a litre of petrol, what is the percentage of Government tax in there and what is the percentage of cost of doing business? Maybe we are then able to sit down as Parliament and say, are we not overtaxing ourselves and what can we do within the taxing model. I thank you.
Hon. Musabayana having stood up to debate.
THE HON. DEPUTY SPEAKER: Hon. Musabayana may you take your seat.
HON. CHINYANGANYA: The Government has said that the fuel players are supposed to import fuel at the prevailing bank exchange rate. We all know that the exchange rate is increasing by the day. What will happen to the fuel prices? Are they going to remain stagnant or they will be increasing on a weekly basis.
My second question is on fuel blending. I once asked the Minister’s predecessor on the issue of blending and he was adamant that unblended fuel does not cover the same distance as blended fuel and he was adamant that blended fuel covers more distance compared to unblended fuel. This showed his lack of depth in the knowledge of fuel. Why does the Ministry or Government not give people the latitude to choose the kind of fuel they need? Whether it is blended or unblended because blended fuel is destroying our engines. It is not cost effective.
The other point is, you were talking about saving energy. We have these monitors that are on 24 hours a day. Why are we talking about saving energy when we cannot save energy in this House? Charity begins at home.
The last point I want to make has already been touched by other speakers – why can we not have solar and gas imports duty free so that we conserve the forex that we do not have. Each and every household will have solar panels and we will know that we will not be using the foreign currency that is in short supply. These are my interventions Madam Speaker Ma’am.
THE MINISTER OF ENERGY AND POWER DEVELOPMENT (HON. CHASI): Madam Speaker, I prefaced my presentation by making reference to the law that sets up ZERA. I made reference to Section 4 of that Act and I pointed out that ZERA has got 18 aspects of its mandate that are stipulated there. Its function deals from the beginning of the fuel chain, the procurement, transmission and distribution. It also includes dealing with issues of competition.
The moment you speak of a cartel, you are speaking to competition. I also made a point that the same law makes it very clear that in its operations, ZERA is subject to no control by anybody and that includes myself. The last point and I really want people to understand this – the role of the Minister is stated in that piece of law and it makes it very clear that the Minister can only give general policy direction. I think that is important in answering Hon. – [HON. T. MLISWA: You know the cartel.] – I am not prepared, neither will I break the law. If this House desires to give me additional responsibilities in the area of petroleum and power, it is up to it to amend the law, but I am going to deal with the legal framework as it obtains at the moment. It is not to underplay the issue that is being raised by the Hon. Member but I think the moment we begin to disrespect the very laws that we make and demand Ministers to do things that are clearly illegal, we are sending a wrong signal to the parastatals that we superintend.
I also made it clear that corporate governance is very key going forward in this sector and that we are going to focus on it and deal with each and every issue that arises, but I want to steer clear from the mandate of ZERA – [HON. T. MLISWA: If you mention one cartel basa rinopera.] – What I am prepared to do Mr. Speaker is require ZERA to carry out its mandate and report to me. In appropriate circumstances, Government will issue the necessary policy direction to ZERA as contemplated by the law.
Issues of violations of exchange control laws – the Reserve Bank has got significant powers to deal with those instances. I think I have covered the issue of corruption in dealing with the previous case that I have averted to. In the same vein, I believe I have also addressed Hon. Chikwinya’s question. I would like to urge Hon. Members to familiarise themselves with the legal framework dealing with our petroleum industry so that law demands that are illegal are made to me. Members might also be interested to note that even in Zambia there is load shedding as we speak at the moment. I made the point to the Energy Committee in the morning that there is a general deficit of power in the region, but I am not going to try and equate this country to Zambia. The economies are different and the Governments are different.
The challenge that we face with the players is that we work together as a nation. This is why we have taken the position as the Ministry that we will engage each and every player in the industry, each and every stakeholder and anybody who can assist to ensure that we deal with the issue. It is known that there are issues surrounding that project and in fact, upon assuming office, I made it very clear that that issue has got to be resolved. That issue has got to be resolved and we also need to take the necessary steps to deal with those that have contravened the Public Finance Management Act who were in situ at ZESA when these issues happened. That law is very clear that anybody who causes loss to Government funds or property is liable. So we expect officers that were at ZESA at that point in time who are either negligent or complicit in the country using that investment to be accountable.
It follows that if there is a multiplicity of people who determine where we are going in terms of resolving this issue and they are not under my control, I am not able to say this is the day that fuel will be delivered to service stations but I can confirm that in discussions today with the players in this industry, they made a commitment that there will be fuel in service stations today. They made that commitment and they assured us that the queues will begin to disappear. – [AN HON. MEMBER: Today?] –
I think people must listen when I speak. I have said that the players made reference to the fact that they are going to make fuel available. I do not have fuel to put into pumps. On issues of ethanol, what I am able to say at this moment and what I have been assured and I am prepared to do a paper for the purposes of this House, is that the blending has been tested and that it is up to international standards. I am prepared to bring in a paper detailing the experts who have conducted this process. – [AN HON. MEMBER: Inaudible interjection.] –
I have said that competition issues, the pricing issues are under ZERA. – [HON. MEMBERS: Inaudible interjections.] –
HON. MLISWA: On a point of order Mr. Speaker Sir.
THE TEMPORARY SPEAKER: What is your point of order?
HON. T. MLISWA: Mr. Speaker Sir, Hon. Chasi is a respected person, one of the most efficient Ministers I communicate with but I think he is fast losing his reputation if he does not do the right things. Talk about real issues. ZERA is under him as the Minister of Energy and Power Development. They report to him according to the governance issues and he cannot choose which one to say and so forth. In English they say different strokes for different folks. It does not work like that. The Minister must assure us and must be very assertive and answer the questions. The pricing is the issue – while ethanol is coming from Chisumbanje and you say it is good, the pricing is not viable. People are suffering in this country because of the pricing. Talk to the pricing. Triangle is cheaper. Brazil is 50 cents; bring it over a dollar, how? This is my question Hon. Minister. –[HON. MEMBERS: Inaudible interjections.] –
THE TEMPORARY SPEAKER: I have noted your point of order. Let me now give the Minister a chance to respond.
THE MINISTER OF ENERGY AND POWER DEVELOPMENT (HON. CHASI): Mr. Speaker, I think Members must decide whether we want to run this sector in a professional manner or not. I want to assure this House that I am not going to meddle and do things that will cause me to break… –[AN HON. MEMBER: Inaudible interjection.] –
Mr. Speaker, I think I should really be allowed to answer unless the desire is not to hear what I am saying. I have said earlier on that my function as stipulated in the law is to give general policy direction. The law is very clear that the price must be fair. It is part of the mandate of ZERA and I have expressed that point that we expect that the public gets value for money, but I am not going to conduct myself in an illegal way. Losing reputation or – [AN HON. MEMBER: Inaudible interjection.] –
THE TEMPORARY SPEAKER: Hon. Mliswa, do you want me to send you out of the House?
HON. T. MLISWA: Sorry Mr. Speaker.
HON. S. SIBANDA: Mr. Speaker Sir, what we have noticed from history is that we have seen ZERA announcing fuel prices and we have seen His Excellency President Mnangagwa announcing the prices in January…
THE TEMPORARY SPEAKER: Can you raise your point of order and not the analysis that you are trying to deliver to the Chair?
HON. S. SIBANDA: My point of order is that the current Energy Minister is saying he is not responsible for setting energy prices, whereas in previous instances, previous Energy Ministers have done so. That is my point of order. We really need the truth to be told in this House. Thank you.
HON. MADZIMURE: My first point of clarification – the only institutions that are independent are constitutional commissions. So, is ZERA a constitutional commission? If ZERA is making it impossible for the Minister to perform his duties, is the Minister going to move for amendments to the ZERA Act and when?
My other question is, the energy policies of this country – who is responsible for them if he has no control over ZERA?
My other point of clarification is that, the Minister talked about the obsolete plant at Hwange which under normal circumstances should have a maintenance schedule that will indicate whether the plant is not obsolete and needs replacement, whether there are any maintenance schedules at Hwange. Can he also clarify the contradictions between the performance of the plant and the corruption at Hwange and when will the Minister present that forensic audit about Hwange which I think is the actual cause for poor power generation at Hwange and not the age of the plant.
My other question relates to the power shortage in the region. Do we actually have a power shortage in the region or we do not have enough forex to import power? Lastly Mr. Speaker, whenever there is load shedding, industrialists and even households resort to the use of generators. At the moment, the Ministry of Energy and Power Development and not ZERA announced a policy where jerry cans should be used.
Finally on the issue of prices, only recently the fuel supplies – the service stations had increased fuel prices and the Minister was the one who was talking about the reduction reverting to the gazetted price. So, was he now usurping the powers of ZERA or he is hiding behind so that he avoids being held accountable for the shortage of fuel? Thank you.
HON. BITI: Thank Hon. Speaker Sir. My point of clarification and perhaps advice to the Minister is 1) on the issue of ethanol. The issue of ethanol is not covered by any law in Zimbabwe. The only law that covers petroleum is the Petroleum Act which was passed way back in the time of the federation and petroleum is defined as two things. It is defined as petrol and diesel which are all hydro carbons. It does not cover ethanol which is agriculture. Ethanol is agriculture whereas hydro-carbon is mining.
So, the Minister is at large when it comes to ethanol. The law that introduced mandatory blending of petroleum with ethanol was a Statutory Instrument that was enacted in 2013 by the Minister of Energy and Power Development. Therefore, it is totally and entirely within the esteemed Minister of Energy and Power Development to actually repeal that Statutory Instrument to address two things that are unacceptable in that Statutory Instrument, which is demand side monopoly and supply-side monopoly. Supply side monopoly is the law that says we can only purchase ethanol from a company that is in a joint venture with the Government yet there is only one company with a joint venture with the Government which is Green Fuels and the company owned by this dealer Billy Rautenbach.
I therefore submit to the Hon. Speaker that he needs to read that Statutory Instrument. But more importantly, he must follow the precedent of Brazil, Malawi, Sweden, United States of America, of actually enacting a new law that deals with alternative biomass energy because the Petroleum Act only covers hydro-carbons petrol and diesel. That then gives him a full mandate to deal with an unregulated industry namely, alternative energy biomass energy, ethanol energy.
The second is demand side monopoly. We all love green energy and that is the route to go, but you must give a customer, an ordinary person the opportunity to choose at a gas station, whether to go for cheap ethanol blended or not. So, the mandatory provision is the mandatory that any gas station must have a pump that is blended and a pump that is not. That is the freedom of choice that is given. So, if you go to countries like Sweden, South Africa and countries in Europe, the mandatory on the demand side is not for every consumer to be forced to consume blended fuel. The mandatoriness is for a gas station to give the consumer choice.
So, if I want to buy pure unleaded fuel, it is my choice. If I want to buy blended fuel, it is my choice but you cannot have demand side monopoly because that comes unconstitutional and is a breach of the right to equal protection of the law covered and defined by Section 56. If you do not do that, you then create the distortion in this country caused by Billy Rautenbach where the price of ethanol and blended fuel – 1) the mix fluctuates. Sometimes it is 5%, sometimes it is 15% and other times it is 20%, which is a problem. Why are we not buying from Tongaat Hullet? Why are we not buying from Brazil? Why are we not buying from the United States of America? Why are we not buying from Malawi? If we did that Hon. Speaker Sir, the cost of ethanol would be 50 cents.
I want to move to a second issue which is the issue of cartels. If you look at our current account and the Minister of Finance and Economic Development is here? Singapore has become our largest trading partner. We are giving to Singapore over a billion US dollar to buy petroleum but Singapore is a tiny little island State which produced nothing. So, why are we buying our fuel through Trafigura, a commodity broker based in Singapore instead of going on the open market and buy our hydro-carbon from Kuwait, from Saudi Arabia, from Venezuela?
So Hon. Speaker, the success of this Minister is going to be determined on whether he can break the stronghold of cartels in the fuel sector in this economy, in particular the following cartels – 1) Trafigura which controls the supply side. 2) Glenco and its indigenous partner that I shall not mention, that all of us know control the pipeline. 3) The retailers, in particular ZUVA, Puma/Sakunda. Those cartels must be liquidated if the price of fuel has to come down in this country.
Thirdly Hon. Speaker Sir, the price of fuel is in US dollars and we are spending over US$1.5 billion on fuel. If sanity has to come down, those that are importing fuel in this country must also be allowed to charge in US dollars. In other words, there has to be a dollarisation of the fuel in this county and that goes without saying Hon. Minister, my brother-in-law.
On energy Hon. Speaker Sir, Cabora Bassa can sell to Zimbabwe today namhla kathesi 350 mega watts of energy. Eskom in South Africa can sell namhla today 350 mega watts of energy. Why is the Government not purchasing and contracting with HBC, why is the Government not contracting with Eskom; the reason is foreign currency. Why are they allowing foreign currency to be their problem? We the consumers can pay in hard currency. So, once again dollarise. I thank you.
THE MINISTER OF ENERGY AND POWER DEVELOPMENT (HON. CHASI): Thank you Mr. Speaker. I want to begin with the last speaker and it is notable in the presentation or the clarifications sought by Hon. Biti that he does not contest the statements or floor that I made regarding the status of ZERA. I think that is a very clear point and as a lawyer, we agreed that my role is clearly defined in the Act to general policy direction. That does not mean [HON. MLISWA: Cartel]–
THE TEMPORARY SPEAKER (HON. MUTOMBA): Hon. Mliswa!
HON. CHASI: Hon. Speaker, the point that has been indicated falls within the purview of ZERA. In my supervisory role as the responsible Minister, I will look at every piece of mandate that is in the Act and require that ZERA performs in a particular manner. I think Members must understand that I have been in office for two weeks. I think that is a pertinent matter. I have not had time to study Brazil, Malawi, Sweden or USA in two weeks on ethanol. So, I prefer that I be methodical, very deliberate and make decisions that are evidence based. –[HON. MEMBERS: Hear, hear] – That point Mr. Speaker, does not require me to say I have been in office for two weeks and to expect me to have covered each and every aspect of issues in this sector; with respect to Hon. Mliswa in particular, is extremely unreasonable.
There are issues of maintenance. On the second day after my appointment, I went straight to Kariba to understand what was happening there because that is the basic source of our power and I think that was a proper thing to do. Thereafter, I have been in a systematic way, which is why I felt it is important that this House must have a basic understanding of this very important sector. From now henceforth, they can have plans as to what it is that is going to be done. We are working on an integrated strategy for power in this sector. We are not looking for five year plans and so forth; we are looking much more beyond that.
The issue of maintenance of various types of equipment; power plants and so forth, that is clear. I have made the point that we need men and women who are strategic thinkers because this is a strategic part at board level and needs skilled people in management. Those are the issues that henceforth we are going to be pursuing and I will be very open with what is happening, give the relevant reports and answer questions as may be required. Definitely, I am not a Chemist, so I cannot speak on the technical issues relating to ethanol but of initial interest to myself upon getting into office was to understand the processes that were taken to ensure the blending was done properly.
It is a matter that I am going to continue to work on and where appropriate, ask ZERA in accordance with the law to deal with it and achieve the necessary results. So competition issues, it is very simple for me. I expect that ZERA must ensure a market that is consistent with the prerequisites of the law. I am not going to be naming people as cartels – [HON. MLISWA: You know you will be fired] – what I can also say is what we need to do in a very direct and deliberate way. When you make decisions, when you are a regulator you base your decisions on information.
THE TEMPORARY SPEAKER: Hon. Minister, address your Chair.
HON. CHASI: I am getting destructed, it is only natural.
THE TEMPORARY SPEAKER: Hon. Mliswa, you are destructing the whole event.
HON. CHASI: Hon. Speaker, what do we need to do? We need a regulator that is empowered, a regulator that has capacity to get information from the market. We have issues as we speak, about fuel that was exported unlawfully; funds that were externalised – [HON. T. MLISWA: By who?]-
THE TEMPORARY SPEAKER: Hon. Mliswa, you are inviting me to send you out right away.
HON. CHASI: I can answer him. This is precisely why I am raising this point to say that when we have technologies that allow us to know what fuel has been delivered where, because part of the public complaint is that they are told that the fuel is finished after 30 minutes of pumping. We want to ensure that we have a system that allows us to give information regarding the players themselves; the distribution of service stations, how much has been pumped at a particular service station, et cetera. When we get to that level, I am sure we will be able to bring sanity to the sector. I thank you.
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