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ZESA pays off Eskom
Kumbirai Mafunda, The Standard (Zimbabwe)
May 08, 2005

Zimbabwe’s debt-ridden ZESA Holdings has undertaken to liquidate its debilitating debt to South Africa's Eskom by the end of this month, Standard Business heard last week. ZESA Corporate Affairs Manager Obert Nyatanga said in just 12 months the parastatal has managed to chop down its debt to US$2,4 million from a staggering US$66 million in May 2004. "We are clearing Eskom's debt this May 2005," declared Nyatanga. He paid tribute to central bank boss Gideon Gono for his "unwavering support" in whittling down the debt, which had been crippling the parastatal over the past five years. At its peak the recurring energy crisis resulted in Africa's largest producer of electricity and one of the largest electricity utilities in the world, Eskom, switching off power to Zimbabwe for two days because of non-payment. Mozambique's Hydroelectrica Cahora Bassa (HCB) supplies have also been curtailed by 40% to 250mw from 400mw. Zimbabwe is suffering a hard currency squeeze and has failed to honour its debt commitments to international lenders and pay for critical medical drugs, machinery and spare parts and food imports. Because of the foreign currency crisis, ZESA had been making a trickle of payments to Eskom.

But owing to the central bank's assistance Nyatanga said the parastatal has also cleared its debt with HCB of Mozambique and Snel of the Democratic Republic of Congo. Due to its poor credit rating Harare is currently prepaying for all its power imports from Snel, HCB and Eskom at a minimum cost of US$4,5 million per month. ZESA's finances have been in a muddle since 2000 when it failed to meet payments to neighbouring countries after hard currency earnings slumped. ZESA, Nyatanga, said is now accessing the 100mw power import from Snel after rectifying a transmission failure, which recently plunged the country into darkness. The restoration of power supply has reduced load shedding from six hours a day to two hours thereby minimising widespread blackouts that were worsening the country's long suffering productive sectors. But the parastatal's malfunctioning generators are still down due to a critical shortage of spare parts. ZESA, will kick-start negotiations for firm contracts with regional suppliers "soon" for the remainder of the year and for 2006-7. "This will however be subject to the availability of power in the region to export to deficit markets like Zimbabwe," he said. ZESA is a major casualty of Zimbabwe's six-year old economic crisis, which is marked by the fastest shrinking Gross Domestic Product (GDP) in the world, escalating inflation now at 123,7% and threatening to spring back as well as a hard currency crunch.

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