Zimbabwe power utility expects loss to widen to $224 million

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Zimbabwe power utility expects loss to widen to $224 million

7:48 CAT | 21 Nov 2016

File photo / Cahora Bassa dam

Zimbabwean national power company ZESA Holding’s loss will widen to $224 million this year from $112 million in 2015 due to higher electricity imports and because it is selling power at below cost, the chief executive said on Monday.

The southern African nation’s economy is struggling from a devastating drought and crippling cash shortages and consumers are struggling to pay utility bills such as power and water.

ZESA Holdings chief executive Josh Chifamba said the power company would spend $160 million this year on imports from South Africa’s Eskom and Mozambique’s Hydro Cahora Bassa, compared to $28 million last year, putting a squeeze on ZESA’s finances.

ZESA is also buying electricity from a local diesel plant at 15 cents per kilowatt-hour, but sells the power at an average 9.86 cents to domestic consumers, Chifamba said.

“We are actually haemorrhaging as it is. We are selling power at below cost,” Chifamba told a committee of parliament.

Zimbabwe’s energy regulator in July rejected an application by ZESA’s subsidiary to raise electricity tariffs by nearly 50 percent, saying it would hurt the economy.

ZESA has set provisions for bad debts at $65 million this year, which would worsen the company’s financial position.

Zimbabwe has approved a raft of power projects in the last two years that would see the country produce excess electricity but it is struggling to raise money to get start the projects.

Source: Reuters