Afreximbank to help ZESA clear its $70m foreign debt arrears

By Bloomberg

ZIMBABWE’S state electricity utility is in talks with the African Export–Import Bank (Afreximbank) to help clear $70m (about R1bn) of arrears it owes power producers in SA and Mozambique.

Zimbabwe Electricity Supply Authority (Zesa) Holdings needs to repay the debt to avoid having supplies shut off. Zimbabwe relies on imports because dilapidated plants and a drought-induced hydropower shortage have left the country unable to produce enough energy to meet requirements.

The company owes money to Mozambique’s Electricidade de Mocambique and Hidroelectrica de Cahora Bassa.

“We are in the process of finalising a financing arrangement,” Zesa CEO Patrick Chivaura said in an interview in Harare.

“We have made great progress in settling our regional suppliers but we still owe them about $70m.”

Afreximbank regional CEO Humphrey Nwugo did not immediately respond to an e-mailed request for comment.

Zesa is honouring an agreement made in August to pay Eskom $4m month, Chivaura said. That allowed Zesa to draw as much as 400MW of power from Eskom in terms of a non-binding contract, he said.

“The other plan which we have put into motion is to firm up our imports from the region,” he said. Zesa expects Eskom to respond by the end of January to its request for a binding commitment to supply power, Chivaura said.

Eskom is struggling to keep the lights on in SA. The state-owned company that provides about 95% of SA’s electricity is struggling with more than R450bn of debt, declining revenue and aging plants.

Zimbabwe’s own ability to generate power has been crippled by lengthy upgrades and repairs at its main Hwange thermal plant and a drought that has reduced output at its 1,050MW capacity Kariba hydropower facility to just 190MW.

Even with imports of power from SA and Mozambique, Zesa can only provide electricity for six hours a day.

Unless it rains, Kariba is unlikely be able to generate power beyond March, Chivaura said. Meteorological agencies in southern Africa have warned that a second consecutive drought in that period is a strong possibility.