HARARE – Zimbabwean businesses are raising alarm over the potential for severe power outages as the country grapples with repaying a Chinese loan that funded the $2 billion expansion of Hwange Thermal Power Station.
Christopher Mugaga, Chief Executive of the Zimbabwe National Chamber of Commerce (ZNCC), warned in comments to the Zimbabwe Independent that the nation could experience its “worst-ever” blackouts in 44 years if Chinese lenders decide to suspend operations of the two new generating units at Hwange over non-repayment of the debt.
Debt Struggles and Economic Pressure
State power utility Zesa Holdings is struggling to meet the $36 million monthly repayments required under the loan agreement. According to the Zimbabwe Independent, Zesa is weighed down by $2 billion in foreign and domestic debt. The company managed its first repayment for the Hwange project in October only after securing a significant electricity tariff increase.
The new generating units, commissioned in August 2023 and constructed by China’s Sinohydro, have been crucial in stabilising the power supply. However, Mugaga stressed the precariousness of the situation:
“Even if units 7 and 8 continue firing on all cylinders, the debt position can make the Chinese switch off until we pay. This is the reason why I say the power situation is dire.”
Existing Power Challenges
Zimbabwe’s energy woes are compounded by the reduced capacity of the Kariba South Hydroelectric Power Plant, which has been affected by persistent droughts. Kariba, with a capacity of 1,050MW, has traditionally been a major source of the country’s electricity.
The ZNCC chief also noted the broader economic impacts of power shortages, warning that sectors across the economy are already feeling the strain.
Call for Budgetary Support
To address the looming crisis, Mugaga urged the Zimbabwean government to prioritise power security in the 2025 National Budget.
“Power shortages are having far and wide impacts in terms of literally all sectors of the economy,” Mugaga said, adding that without sufficient funding, the country risks a complete breakdown of its energy infrastructure.
China Relations and the Path Forward
While China and Zimbabwe maintain warm bilateral ties, there has been no official indication from Chinese lenders about suspending operations at Hwange. The loan, signed in December 2015, was provided by the Export-Import Bank of China under a preferential buyer’s credit agreement to construct units 7 and 8 at Hwange.
With businesses sounding the alarm and existing blackouts already hampering productivity, Zimbabwe’s energy future remains uncertain unless a sustainable repayment and energy policy is put in place.