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ZESA press release
Zimbabwe Electricity Power Authority
February 22, 2012

The purpose of this bulletin is to provide information to our stakeholders on developments in the power sector. In the process we also hope to address some of the concerns that have recently been raised by some of our stakeholders on a number of issues.

Power Supply & Development

The problem with the power supply situation in Zimbabwe arises from the fact that the installed power generation capacity in the country is less than demand. The power system also suffered from the economic downturn over the last decade. The sub-economic tariffs that were charged during that time meant that the revenue that was generated was not enough to enable maintenance to be carried out at the level required to maintain a decent level of supply. The problem is made worse by the following factors:

• 35% of that installed capacity is out of service due to age, maintenance, etc.
• Power imports are limited as the shortage is regional in scale.
• The utilisation of electricity is largely inefficient in Zimbabwe.
• Inability and/or unwillingness to settle bills.

In order to address the situation the following measures are being implemented:

Operational issues:

• Refurbishment work is being carried out at Hwange Power station (HPS)
• Refurbishment work is being carried out at the transmission and distribution system levels
• An efficiency initiative will soon be implemented to replace inefficient incandescent lighting with compact fluorescent lighting
• On the back of the tariff that was introduced in September 2011, maintenance work, which is now possible, is being implemented
• Revenue collection is being accelerated

Developmental issues:

• A consultant, Hatch, was appointed to finalise a feasibility study for HPS extension & Kariba Power Station extension and that has been successfully completed.
• An Expression of Interest, to qualify prospective contractors for the development of the projects was completed successfully. The pre-qualification of bidders was followed up by visiting banks in the prospective bidders' countries to verify issues of funding.
• Technical bids will shortly be sent out to pre-qualified contractors and thereafter appointment of successful contractors.
• It is our aim to reach financial closure on these development projects in the beginning of the fourth quarter of 2012. This will ensure that by the end of 2015, the new plant will start to come on stream. The Ministry of energy & power Development, and the government at large, is providing invaluable guidance and support in this endeavour.

Billing

A lot of genuine complaints have been raised by our customers concerning the billing system. We are pleased to advise that the billing system has now been upgraded and now running live in Harare as from this month, after some test runs were made to our satisfaction. Barring any unforeseen aspects, we now have confidence that the billing woes will soon be behind us and customer anxiety in this area will be eliminated. The system is now being rolled out to other regions in the country. We have deliberately chosen a billing system with some modules that will be used when we migrate to prepaid metering and which will also remain to serve customers who will not be on prepaid metering.

Prepaid Metering

We recently concluded contract negotiations with successful bidders on the prepaid metering project. The installation will be done by the meter suppliers and this strategy is to ensure that the roll out takes place in the shortest possible time. The plan is to have the meters installed over a period of 18 months. We are also at the same time going to run a pilot project to test smart metering, with a view to employing this technology as part of our strategy towards establishing a smart grid, to address efficiency in electricity utilisation.

CFL lighting

The compact fluorescent lighting (CFL) program, which entails replacing inefficient incandescent lights, will soon be underway. We really welcome the debate that is taking place on whether the program should be embarked upon and whether, in view of the falling prices of CFLs, ZESA should finance it. Our position is that efficiency in utilisation of electricity is an integral part of the strategy to address the current power shortage. The investment in CFLs is attractive: we will be spending $7 million to "generate" 150 MW, which roughly translates to about $50,000 per MW in capital, compared to $3 million per MW, on the expansion projects. In addition the quick turnaround of the project adds significantly to its attractiveness. We also believe that it is prudent for ZESA to finance the initial installation in order to quickly realise the benefit and help in alleviating the power shortage. We agree that there is need to have legislation in place to ban the inefficient incandescent and, together with the Ministry of Energy & Power development, the issue is being addressed. We are however cognisant of the fact that the effectiveness of such legislation will only be achieved by its enactment in all the countries in the region. Implementing the legislation only in Zimbabwe without the cooperation of neighbouring countries will make it difficult to enforce it in Zimbabwe. Fortunately this position has been appreciated by all regional countries and a concerted effort is being worked out to enact this legislation in all SADC countries.

Revenue Collection

We have intensified our effort to collect outstanding bills, especially on the back of improved billing. The program is critical for sustaining operations and to maximise benefit from the tariff, including supporting the importation of electricity. There are prospects for increasing imports from new stations being developed in the region. We are in discussion with the concerned developers and we have to position ourselves as a credit worthy off taker to be able to tap from these new sources. We therefore urge all our customers to pay their bills on time and to bring their accounts up to date. We have availed to customers a facility to propose workable payment plans and this has helped a lot. Regrettably some customers have chosen either to ignore this facility or not to honour their payment plans, leaving us no option except to withdraw supply.

In conclusion, we need to highlight that we are very cognisant of the supportive role that electricity plays in an economy, and to express our commitment to supporting national programs for growing the economy of Zimbabwe, such as the Medium Term Plan (MTP). We do appreciate the anxiety amongst our customers concerning the supply situation; unfortunately it takes 4-5 years to build a power station and, a key prerequisite to be able to do so, is the need to have in place a cost reflective tariff, so that the projects are bankable. This has been the Achilles heel that made it impossible to build power stations in Zimbabwe for the last twenty years, when we needed to do so. Incidentally it is also one of the most critical elements required, to attract private sector investment in the power sector.

Please refer any questions to pr@zesa.net, and you may also visit our website at www.zesa.co.zw for daily generation statistics. 

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