Zesa eyes $40m from ferrochrome producers

POWER utility Zesa Holdings intends to raise as much as $40 million from ferrochrome producers as prepayment for electricity to cushion it from liquidity challenges.

Sources familiar with the negotiations said Zesa proposed to have the producers advance $ 40 million loan and promised uninterrupted power supply, outside of emergencies beyond its control.

But the ferrochrome producers are willing to advance the money on condition the debt would be amortised against power consumed.

“That is the major sticking point,” said one source who requested not to be identified.

“Zesa needs the money in form of a loan, which will factor in the interest rate but the ferrochrome producers want an arrangement were Zesa will provide a special power tariff.

“Then the debt would be gradually paid off against electricity consumed by the producers.”

Zesa spokesperson Mr Fullard Gwasira confirmed t he power utili t y was having discussions with some of its export earning customers in various sectors of the economy to get solutions to the liquidation of the import bills as they become due.

“You should be aware that even domestic customers are pre- paying for their supplies and therefore the concept is not new but an extension to those other capable sectors,” he said.

As such “a lot of progress has been made with finalisation at various stages depending on the sector.

“But due to third party confidentiality issues we are not able to give specifics.

“It suffices to just say that we are grateful on the progress we have achieved so far with the supportive customers.”

It could not be immediately established how much Zesa intends to raise from other exporters.

Zesa imports power from regional utilities including Hydro Cahorra Bassa and Eskom of South Africa to cover local supply gaps due to limited capacity.

Zimbabwe requires an average of 1 400 megawatts against an average generation of 1 000MW.

Only Kariba South power station can generate power at installed capacity of 750MW, but output is currently regulated due to low lake water levels.

While Hwange power plant has installed capacity to produce 920MW, it can only manage about 400MW as the station is now old.

The other small thermals; Bulawayo, Munyati and Harare can only produce at a fraction of their design capacity and are also aged.