Local manufacturers are grappling with severe power cuts lasting over 18 hours daily, forcing them to rely on expensive diesel generators, which significantly increases production costs.
Zimbabwe requires about 1,700 megawatts (MW) of electricity during peak hours, but the state-owned power utility, ZESA, was generating just over 800 MW on Wednesday, October 30.
The Confederation of Zimbabwe Industry (CZI), the country’s largest business lobby group, described the situation as dire. Said the CZI:
Industry members have reported going for between 12-18 hours without electricity and report that power is being restored between 11 pm and 7 am in the majority of cases.
The absence of a load schedule that is strictly adhered to has exacerbated the effect of the power cuts as affected companies cannot plan employee deployment resulting in redundant working staff for periods when power is unavailable.
The other consequence of unscheduled power cuts is that machinery requires a systemized shutdown process in order to ensure raw materials are fully utilized and the machinery itself is properly shut down.
Sudden power outages result in loss of raw materials and equipment damage.
Some machinery requires process heating, which involves applying heat during industrial operations. This heating can take 3 to 5 hours before production starts.
Consequently, if electricity is available for 8 hours, effective production time is limited to just 3 to 5 hours. The CZI said:
However, the electricity bill will reflect usage of 8 hours against actual production of only 3-5 hours. In sectors that heavily rely on electricity such as the plastics and cement industry this can mean failing to achieve the economies of scale necessary to cover production costs.
This situation is particularly severe for companies that do not have dedicated power lines which are normally found in the small to medium sectors.
Companies have sought to mitigate the effects of power outages through the installation of solar energy and battery storage for use at night.
However, this is often very expensive and requires significant funding that many firms struggle to secure.
Christopher Mugaga, CEO of the Zimbabwe National Chamber of Commerce (ZNCC), told Business Times that power outages will significantly affect the country’s economic performance in 2024.
He said the ongoing rolling blackouts could reduce the Gross Domestic Product (GDP) by 0.6 percentage points.
Mugaga operating generators is costly, which companies are using for 14 to 18 hours daily.
This situation not only deters investments but also leads to substantial losses in foreign direct investment (FDI), estimated between $120 million and $150 million annually due to power shortages.
Oswell Binha, chairman of the CEO Africa Roundtable, said power outages can last 18 hours or more, and in some cases, the power quality is so poor that businesses cannot operate even when electricity is available.
He described the situation as critical, with many companies relying on costly generators. This dilemma forces businesses to choose between raising prices or facing severe shortages in stores.
More: Pindula News