South Africa’s state-run power utility, Eskom, is set to cut power supplies to Zimbabwe by the end of this month (May) if Harare fails to clear arrears. Cutting its supply to Zimbabwe could trigger widespread power cuts in an economy that is already battling with a liquidity crunch, but hopes for faster growth this year after heavy rain boosted crop production.
Zimbabwe imports 300 megawatts per day from Eskom, but owes the utility R603million, of which R119million is outstanding arrears, Zimbabwe’s state-run Herald reported. Acute shortages of foreign currency have seen the southern African nation struggle to pay for imports.
In response to queries from the African News Agency (ANA), Eskom said “Eskom can confirm it had concluded a repayment plan with ZESA and have subsequently given ZESA an extension to end May 2017 to ensure compliance and have indicated that no further leniency will be given. The quoted balance is incorrect, with ZESA owing Eskom considerably less than the stated R1.078 billion, and Eskom has sufficient guarantees in place to secure the debt.”
Zimbabwe Electricity Supply Authority (ZESA) had made a payment plan with Eskom earlier this year, but defaulted due to a shortage of foreign currency reserves in Zimbabwe’s struggling economy. Zimbabwe, which uses US dollars, has introduced bond notes to try and mitigate the shortage of money.
The Herald quoted a letter from Eskom’s acting chief executive, Matshela Koko, telling Zimbabwe state power company ZESA it had failed to stick to an agreed payment plan. “Kindly note that no further leniency or accommodation will be made in this regard,” Koko said.
Zimbabwe’s imports from Eskom are backed by an R500million guarantee issued by President Robert Mugabe’s government. ZESA chief executive, Josh Chifamba, was quoted by the Herald as saying the utility was talking to the central bank about foreign currency allocations and was confident there would be no power disruptions. “We are getting support from the Reserve Bank of Zimbabwe and some of our customers who are into exports, particularly ferrochrome ones. We are confident that the issue will be resolved in good time to avoid disruption to power supply. It’s under control,” Chifamba said.