Zimbabwe will continue to experience load shedding despite commissioning Hwange Power Station Unit 7 because the unit is not yet operating at full capacity and South Africa has reneged on its contract to supply Zimbabwe with power.
Energy Minister Zhemu Soda told Parliament yesterday that South Africa was not giving Zimbabwe adequate power as per their contract because of power problems Pretoria was experiencing at home.
Soda said Unit 7 was only supplying 200 MW at the moment, having progressed from 50MW to 75MW and then to 200.
Responding to questions in Parliament Soda said: “Unit 7 was finally synchronised on the 20th March and is still undergoing commissioning tests where it shall be operating at various performing levels. It started off at 50, moved to 75 and as we speak, it is sending out around 200 megawatts but it shall be scaled up to 300 with time as they continue to do their compliance tests.
“Mr. Speaker Sir, Hwange Power Station, the old units continue to give us problems. I once said in this House that ultimately, our intention would be to rehabilitate the old units with the intention of restoring the performance to the installed capacity of 920 megawatts. As we speak, today Hwange is sending out 303 megawatts into the grid and we are also receiving electricity from Kariba. We are still at 350 megawatts. It is our hope that as we begin the month of April, water allocations are going to be reviewed by ZRA so that we ramp up on our production of electricity from Kariba.
“I agree with the Hon. Member on the concern that he has raised that the power supply situation is still depressed, even with the synchronisation that has happened on Unit 7, we are still below demand that is currently obtaining. We are looking forward to the completion of expansion project by bringing in Unit 8 which will come after April but precisely in May, according to the targets that ZPC has on bringing that unit onto the grid. Like I once said, it is only when we have completed the expansion project that we would have sufficiently dealt with the load shedding situation that we are currently experiencing.”
Below is the full Q & A:
HON. MATEWU: Thank you Mr. Speaker Sir. My question is to the Minister of Energy. What is Government policy in relation to the new Unit 7 at Hwange? What the citizens had been assured is that once we roll out Unit 7, there is going to be more electricity in the households but it has now gone even worse. There is now continuous and substantive lack of electricity. In Marondera for example, we only get electricity two hours at night. In the day, there is nothing. What is Government doing to ensure that people have electricity in their homes? Thank you.
THE MINISTER OF ENERGY AND POWER DEVELOPMENT (HON. SODA): Thank you Mr. Speaker Sir. This is not a policy issue but I get the concern from the Hon. Member that the power situation has been depressed. I will give an explanation but also to indicate that Unit 7 was finally synchronised on the 20th March and is still undergoing commissioning tests where it shall be operating at various performing levels. It started off at 50, moved to 75 and as we speak, it is sending out around 200 megawatts but it shall be scaled up to 300 with time as they continue to do their compliance tests.
Mr. Speaker Sir, Hwange Power Station, the old units continue to give us problems. I once said in this House that ultimately, our intention would be to rehabilitate the old units with the intention of restoring the performance to the installed capacity of 920 megawatts. As we speak, today Hwange is sending out 303 megawatts into the grid and we are also receiving electricity from Kariba. We are still at 350 megawatts. It is our hope that as we begin the month of April, water allocations are going to be reviewed by ZRA so that we ramp up on our production of electricity from Kariba.
I agree with the Hon. Member on the concern that he has raised that the power supply situation is still depressed, even with the synchronisation that has happened on Unit 7, we are still below demand that is currently obtaining. We are looking forward to the completion of expansion project by bringing in Unit 8 which will come after April but precisely in May, according to the targets that ZPC has on bringing that unit onto the grid. Like I once said, it is only when we have completed the expansion project that we would have sufficiently dealt with the load shedding situation that we are currently experiencing.
There has been an expansion in the level of economic activities. You will agree with me that there is expansion in agriculture and in the mining sector. So, the demand continues to grow but we have plans to deal with that growth that is also happening in terms of the demand side. I have spoken about the rehabilitation where we intend to restore the current units to the installed capacity of 920 and also the participation of the independent power producers, the private sector also making a contribution. As we speak, not so much that they have started to feed into the grid. We have some projects that are under construction and we think that is going to make a contribution once they are concluded, including some imports. South Africa has not been giving us adequately as per the contract because of what they are also experiencing in their country. That has also caused the problems that we are currently facing Mr. Speaker Sir. I thank you.
HON. MAKHARM: Thank you Mr. Speaker. What is the Government policy; with the incoming 300 megawatts, are they going to keep the same level of import or to reduce the imports and keep us on the heavy load shedding, or they are going to release more power to the consumers?
HON. SODA: Mr. Speaker Sir, we will not reduce on the level of our imports immediately until we have sufficient power supply in the country. Unfortunately, South Africa is having their own problems which we are all aware that they have a crisis in their country. Whenever they are having that crisis – obviously, they will not send us as per what has been contracted. So the policy, to respond to the Hon. Member’s question, we will continue to import until we have reached a level of self-sufficiency in the country. I thank you.
HON. MAHLANGU: Thank you very much Mr. Speaker Sir. I just what to find out from the Hon. Minister, we really appreciate that he said that he installed Unit 7 power generator or something like that at Hwange Power Station. I just want to know when the Unit 7 generator is going to be functional because as we speak, he made an announcement two weeks ago but to date, we still have challenges in getting electricity. When are they going to make that Unit 7 generator functional so that people cannot be complaining about ZESA? I thank you.
HON. SODA: Mr. Speaker Sir, Unit Seven (7) was synchronised on 20th March. It will undergo commissioning tests for three months before it is commercially available. I think that is the response to the question that was posed by the Hon. Member. Thank you.
HON. MARKHAM: Good afternoon Mr. Speaker, thank you. Mr. Speaker, my question is to the Minister of Energy and Power Development pertaining to the Independent Power Producers (IPPs). Mr. Speaker, the IPPs are already on their knees because they borrowed and invested money all in United States Dollars.
The payment from the Government of Zimbabwe is in Zimbabwe Dollars local which the Government insists on. Can the Minister apprise us on what he plans to do with these people, particularly when the interbank rate is starting to move rather quickly? What is Government policy to keep the independent producers that are in power viable? Secondly, those who were about to come onto the grid, what encouragement have they got to finish the job if they are only going to be paid in the receiving currency? Thank you.
THE MINISTER OF ENERGY AND POWER DEVELOPMENT (HON. SODA): Thank you Mr. Speaker Sir. Mr. Speaker Sir, we have a Government Implementation Agreement which was issued by the Ministry of Finance and Economic Development precisely on 19th December, 2022. It was announced by the Minister of Finance and Economic Development as a means to mitigate against the risk of currency convertibility.
It has been an issue for quite some time where investors would bring their money from outside the country, develop a project in Zimbabwe but at a time when they wanted to repay for the loans that they would have procured for the purposes of developing that project, it was a nightmare for them. Also, when project developers were intending to expatriate proceeds of their investments outside the country, they were facing that challenge due to the issues of our currencies.
The Ministry of Finance and Economic Development has come up with a Government Implementation Agreement which is a mechanism to deal with the currency issues and the expatriation risks. We now have something in place and I will advise the Hon. Member, including others, to speak about what the Government of Zimbabwe is doing to incentivise project developers and to mitigate against risks that he has just spoken about; not only that, we also have quite a number of incentives to attract or to make the investment environment to become conducive.
We have tax rebates that are on offer, the Government of Zimbabwe is also assisting project developers with land allocation for the development of their projects including tax holidays that are also on offer. So those, including the Government Implementation Agreement are mechanisms that the Government has put in place to ensure that projects are developed and risks are mitigated. I thank you Mr. Speaker Sir.
HON. MARKHAM: Thank you Mr. Speaker. Mr. Speaker, my point is, if you are not making money and you are on your knees tax incentives are irrelevant. What I would like to ask the Hon. Minister is, I cannot understand why when we import we pay dollars. So, we are paying a foreigner money in dollars. When we get an investor who invests his dollars here, we fail to pay him dollars, yet a large portion of ZESA revenue is from the consumer. I cannot understand why the Government is refraining from paying the IPPs dollars unless they do not want them to operate. Thank you.
HON. SODA: Mr. Speaker Sir, it is not about unwillingness by the power utility to pay project developers in dollars. It is because the money is not adequate. We are all aware that we supplement our locally generated power with imports and we promulgated a policy to deal with collection of revenue in foreign currencies specifically for the purposes of paying for power imports – that money is not adequate until a time when we would have replaced the capacity that we are importing with locally generated power, just like we are doing with Units 7 and 8.
When we have fully replaced that power, the power that we are importing with what we are generating locally then we will stop importing and when we have stopped importing, obviously we will be able to pay IPPs in dollars but as we speak, the capacity is not there. ZESA is not able to pay for power imports including power that is locally generated from independent power producers in foreign currency.
We have come up with a mechanism to allow Independent Power Producers to meet their financial obligations with funders for their projects through the Government Implementation Agreement. This is what we are doing. At the moment, ZESA does not have adequate funds to pay for power imports and locally generated power. Thank you Mr. Speaker Sir.
HON. BITI: Mr. Speaker Sir, my supplementary question to the esteemed Minister of Energy is that it is very unlikely that in the mid-term, Zimbabwe will be able to produce electricity that will meet the national demand of around 4000MW even if we add Unit 7 and 8 which is a mere 600MW, it will not help. The units at Hwange except for Unit 4 are old and archaic and should have been decommissioned. So, there should be a deliberate policy of making sure that household and individuals are self-sufficient from a solar point of view. Why does the esteemed Minister of Energy not carry out a deliberate policy of ensuring that there is facilitation of the solarisation of the movement to alternative energy of all household and you encourage this through the removal of duties on things such as lithium batteries, solar panels and so forth.
The fact of the matter is that we are on our own. So, remove duties and put incentives to individuals who are moving to reliable energy and importers of these equipment like lithium batteries and solar panels and particularly to people who can put huge solar panels that can feed the grid. Why do you not give them incentives because pretending that ZESA will solve our problems is just a pretense and we cannot keep on pretending because we have a problem?
HON. SODA: Thank you once again for allowing me to respond to a new question though it came in the name of a supplementary but I will respond to that question. I am happy the Hon. Member has pointed out to the issues that are affecting us, being the age of the equipment at Hwange Power Station. The policy that we already have is that of rehabilitating the old equipment. We have that policy which is backed by action. There is a loan facility of US$310 million which was procured from the Indian EximBank which will be used for rehabilitation of the old units at Hwange Power Station, Units 1 to 6. Already, work has started. A detailed project report was produced by the project management consultants, WAPCOS Company from India. It has since produced a report on the scope of works that would require to be done to bring back equipment to the installed capacity of 920MW.
Like I indicated earlier, as we speak today, the combined generation which is coming from Hwange is 303MW whereas it has potential to go up to 920MW. The equipment is old and what needs to be done is just to rehabilitate by bringing new equipment so that we achieve the installed capacity of 920MW. The policy is already in place.
Moving on to the suggestion which was made by the Hon. Member that we could allow individuals to supplement using solar system and he has suggested that taxes be removed on imports of solar modules, that is already in place and I will ask the Hon. Member to have a discussion with me on what he has experienced. As far as we are concerned, solar panels are coming duty free into the country. Again, we have a facility called net metering where if you have your solar system at your roof top and you are generating in excess of what you require, you can send the excess into the grid. This time ZESA has agreed that instead of just accruing some units, ZESA will soon be paying for the unit that will be sent to the grid. There is also virtual connection, for instance, one might be having two more facilities that have to be linked to one account, that is now possible through net metering facilities. We have quite a number of mechanisms by which we think we will be able to deal with the current power situation. Going into the future, we are also looking at developing some big projects like Batoka which is on the cards and there are some plans to obtain funding for that project.
THE TEMPORARY SPEAKER (HON. MUTOMBA): Hon Minister, may be for the benefit of the Hon Members, yes you have touched on the solar panels which you have said are duty free, what about the lithium batteries? If you could clarify on that one.
HON. SODA: All renewable energy equipment is imported into the country duty free. I thank you.
HON. GABBUZA: When fuel was a problem in this country, Government moved in to ensuring that it is sold in foreign currency. Since there is a shortage of foreign currency to import energy, would the Minister consider incentivising those who are able to pay in foreign currency so that they settle their bills in foreign currency by a certain incentive so that we sort out this problem of foreign currency shortage.
HON. SODA: We have some companies that are producing their wares for export and those are supposed to pay their bills in foreign currency. We have exporters, those that are producing 80% of their wares which find their way out of the country, they are regarded as exporters and they are supposed to defray their bills in foreign currency. Then we have partial exporters, those that are above 35% but below 80%, they also have a portion which they are supposed to pay in foreign currency. That is already in place. What we may not do immediately is to ask the domestic consumers to pay their bills in foreign currency. That, we will not do in the interim until we have ascertained that they are earning their income in foreign currency. We will continue to receive that income in local currency but there is a mechanism to preserve that tariff to remain at the US$0.1063 equivalency but being in local currency. I thank you.