A few months after ZESA Holdings cleared a massive US$100 million debt owed to Mozambique’s Hydro Cahora Bassa (HCB), investigations by The Financial Gazette’s Companies & Markets (C&M) this week reveals that the debt is on the rise again.
Sources told C&M last week that the debt had risen to about US$27 million, a move which could force HCB, the only remaining regional supplier of electricity into the country, to cut supplies.
The move could significantly disrupt the country’s economic activities and possibly precipitate an economic crisis.
Ministry of Energy and Power Development’s permanent secretary, Partson Mbiriri, this week confirmed the development when contacted for comment by C&M, saying indeed the debt to HCB had risen to US$26,7 million by the end of July.
He, however, said his ministry would ensure that the HCB debt would be curbed and not exceed US$30 million.
“The debt to HCB which stood at about US$100 million was cleared towards the end of last year,” Mbiriri told C&M.
“But as at the end of last month (July), the balance had gone up to US$26,7 million.
“However, to guarantee continued imports so as to achieve security of electricity supply in line with the existing arrangements under the Power Purchase Agreement with HCB, we will ensure that the debt won’t exceed the US$30 million level at any given point,” he said.
The government has also taken steps to reduce the US$70,8 million Federation-era power debt to Zambia after it paid US$40 million as reported by C&M last week , paving way for the construction of the Batoka Gorge Hydro electricity project.
ZESA cleared the US$100 million debt it owed HCB after struggling to service the debt due to liquidity challenges in the economy.
The power utility received US$40 million from two local platinum companies, Mimosa and Zimplats, which was credited to their accounts as pre-payment for electricity.
The utility had failed to mobilise the funds through disconnecting domestic and commercial electricity consumers.
The country has relied on electricity imports from regional utilities to supplement local supplies that are failing to meet demand.
The country requires about 2200 megawatts (MW) but is producing about 1 300 MW resulting in the necessity for imports and load-shedding.
Electricity load-shedding increased soon after the July 31 elections which were won by President Robert Mugabe and his ZANU-PF party, a development seen by some as part of a bid by the company to sabotage the economy.
ZESA however, rejected the claims saying consumers owe the company up to US$450 million in unpaid bills and management blames the debt for the utility’s problems in paying regional suppliers.
It also says the increased load shedding was due to reduced output from its power generating units.
The power utility said load shedding was further compounded by depressed imports due to plant maintenance at HCB.