Power utility ZESA Holdings is pursuing cost containment measures and at the same time trying to convince some suppliers to accept a portion of payments in the ZiG currency.
This was said by ZESA group financial controller, Eliab Chikwenhere when he appeared before the Parliamentary Portfolio Committee on Energy recently.
The power utility is currently servicing two loans of US$319 million and about US$1 billion provided by China Exim Bank for the expansion projects at Kariba Hydro Power Station and Hwange’s units 7 and 8, respectively.
Chikwenhere said ZESA is engaging the China Exim Bank and Sinohydro Corporation to negotiate the imposed penalties due to delays created by monetary policy changes and restore its Escrow accounts. Said Chikwenhere (via Chronicle):
We have come up with a programme to ensure that at least we try by all means to save money through cost containment measures and at the same time try to the extent possible that some of our operational requirements are paid in ZiG
There is a programme that we have now to ensure that at least while the bill for Hwange 7 and 8 is US$36 million, we sincerely believe that some of the things can be paid locally.
We have identified certain things we can pay for locally in ZiG. It’s a programme that we started about two months ago and we are trying to engage some of the suppliers.
While the contract says you are paid in USD, we want to convince them to accept perhaps payment half in ZiG or a portion payment that will be the way to go because there is no way we can sustain a bill of US$36 million, it’s not possible.
Every month, we are required to pump out US$18 million each for units 7 and 8, which is US$36 million and this is 100 per cent in USD.
He said ZESA Holdings’ revenue remains subdued compared to critical obligations such as financing operations, repaying loans, buying spare parts and paying for electricity imports. Said Chikwenhere:
We’ve established a trend after the tariff adjustments in November-December. Every month, we collect close to US$51 million, which we use to finance our requirements.
Out of that US$51 million, Hwange Power Station Units 7 and 8, require $36 million and yet we are also required to import power from the region for about $25 million monthly.
If you add the two figures they will go beyond the total that we are getting as ZESA. Over and above that, we need US$5 million to import spares.
He said ZESA was collecting about ZiG400 million per month and hoped to ride on the firming local currency to push for certain services to be paid in ZiG. Added Chikwenhere:
We now have to identify specific customers that will pay directly into those Escrow accounts (funds held in trust).
I can confirm that some of the customers that we have identified include the new mines Bikita, Kao Investments, Gwanda and Kamativi.
The bills will increase gradually and this will assist us in resolving some of the challenges we are having in terms of payment.
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