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Cape Town, South Africa, 2011/03/01 - Zimbabwe recently reached an agreement with the DRC to import 100 MW of electricity, however, Frost & Sullivan believes it will not significantly change the electricity supply situation within the country in the long term.
This move comes as the State utility, ZESA, is under increasing pressure from the Zimbabwean government to reverse a 30 percent tariff increase it announced in February 2010,
The government of Zimbabwe, through the Ministry of Energy and Power Development and the Ministry of Economic Planning and Investment Promotion, has managed to increase available electricity by approximately 7 percent since August 2010, but the current electricity demand and supply situation requires significant investment into increasing generation capacity. "The reversal of the tariff increase, put in place by ZESA, will affect plans by the state utility to fulfill on existing and future electricity import contracts as the current energy charge of 7.5 US cents per kWh is insufficient to allow ZESA to operate efficiently," says Frost & Sullivan's Energy and Power Research Analyst, Vincent Maposa. "Concerns about ZESA's ability to meet contractual obligations will affect its profile as an importer of electricity from other countries within the SADC region," notes Maposa.
In September 2010, Zimbabwe's electricity production output which included 275 MW of electricity imported from Zambia and Mozambique, accounted for approximately 60 percent of installed capacity. Zimbabwe presently has an installed capacity of 1960 MW and an electricity demand of approximately 2400 MW. "No significant investment into increasing installed electricity capacity has been made in over 25 years," notes Maposa.
Current available electricity capacity of 1400 MW accounts for 58 percent of electricity demand. Electricity demand is expected to increase by approximately 2.5 percent per annum until 2015 when it is estimated to reach 2650 MW. ZESA also exports 150 MW of electricity generated at Hwange Thermal Power Station to Namibia, which has been a contentious issue among various stakeholders, as it apparently defies logic for ZESA to export electricity whilst still importing electricity from other countries. However ZESA has indicated that it is contractually bound to continue exporting electricity to Namibia. In 2007, Namibia provided US$ 40 million for the refurbishment of Hwange Power Station in exchange for electricity.
In September 2010, RioZim, a diversified mining company, was licensed to construct a 2400 MW thermal power station in the Gokwe Sengwa coal fields. The Gokwe North Power Station is expected to be commissioned by 2014 and will be constructed at a cost of approximately US$1.5 billion. "Development of the Gokwe North Power Station could be subject to delays as is the case with projects of this nature," says Maposa. Excluding the Gokwe North Power project, Zimbabwe has several planned electricity generation projects such as the Lupane Coal Bed Methane Power Project that could increase electricity supply to both industrial and domestic end-users. Maposa says,"The major impediment to development of the planned projects, is the unavailability of funding and lack of commitment by potential project developers who cite the ambiguity surrounding Zimbabwe's Indigenization policies as one of the major reasons for non-committal."
Frost & Sullivan expects recent developments within the electricity industry such as the re-commissioning of the 100 MW Bulawayo Thermal Power Station, to lead to temporary decreases in load shedding. "Since 2002, load shedding has significantly affected productive sectors of the Zimbabwean economy such as mining and manufacturing and this has resulted in companies like New Dawn Mining signing continuous supply agreements with ZESA in order to increase mineral production output," explains Maposa.
In February 2011, ZIMPLATS another mining company, signed a contract with HCB of Mozambique allowing the company to import 100 MW of electricity for use in its US$ 500 million production capacity expansion exercise. Frost & Sullivan believes economic growth in the country is pinned on availability of electricity to the mining, manufacturing and agricultural sectors.
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