Africa Energy Finance Mozambique South Africa Zimbabwe

Zimbabwe reaches out to Afreximbank for its energy debt

Talks between Zimbabwe’s State electricity utility and the African Export–Import Bank might – if successful – help the country cut some $70 million of debts it owes to power producers in South Africa and Mozambique.

Zimbabwe currently imports a considerable amount of energy mainly due to a hydropower shortage – made worse by severe droughts – and poorly-maintained power plants, backing Zesa Holdings (Zimbabwe Electricity Supply Authority) into a corner if the aforementioned debt is not paid-off, at the risk of having supplies cut off by its neighbouring creditors: South Africa’s State-owned Eskom Holdings and Mozambique’s Electricidade de Moçambique and Hidroeléctrica de Cahora Bassa.

“We are in the process of finalizing a financing arrangement,” Zesa CEO Patrick Chivaura said in a recent interview in the capital, Harare. “We have made great progress in settling our regional suppliers but we still owe them about $70 million.”

According to Chivaura, Zesa is honoring an agreement made in August to pay Eskom $4 million a month, which allowed Zesa to receive in excess of 400 MW of power from Eskom in terms of a non-binding contract, he said.

“The other plan which we have put into motion is to firm up our imports from the region,” he said. Zesa now expects Eskom to respond to their request for a binding commitment to supply power by the end of January, said Chivaura.

Eskom provides about 95% of South Africa’s electricity but is struggling with more than R450 billion of debt, declining revenue and aging power plants.

Zimbabwe, on the other hand, has compromised its own capacity to generate power due to lengthy upgrades and repairs at its main Hwange thermal plant and a drought that’s reduced the output of its 1050 MW capacity Kariba hydropower facility to just 190 MW. Even with those imports of power from South Africa and Mozambique, Zesa can only provide electricity for six hours a day.

Without rain, Kariba likely won’t be able to generate power beyond March, Chivaura said. Meteorological agencies in southern Africa forecast that a second drought is a looming possibility.

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