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Kariba South Power Station’s acting general manager, Engineer Evans Chikwana, said the loans had attracted US$7,5 million in interest.
“We do have working capital constraints and the problem we have is that all suppliers now want cash u-front because of our huge debt,” said Eng Chikwana.
He was briefing Economic Planning and Investment Promotion Minister Tapiwa Mashakada during a tour of the power station last week.
Minister Mashakada is touring all flagship projects in the country to assess the progress of the Medium Term Plan, targeting a 7 percent growth in the economy.
The macroeconomic targets were not achieved due to the poor performance of the agricultural sector and lack of long-term funding.
Electricity growth was revised downwards to 4,5 percent, from 4,9 percent.
This was caused by continuous breakdowns and intermittent generation at all small thermal stations, caused by costly transport problems and aged equipment.
Eng Chikwana said the State Procurement Board was not pragmatic in its selection of bids to supply spare parts to the power station.
Built between 1956 and 1960, Kariba South’s machinery is now considered obsolete.
The spare parts can only be accessed from Alstom but the SPB insists on three quotations.
“It takes us almost three months to secure the spare parts due to delays at the SPB,” he said.
In an interview with Herald Business, Minister Mashakada said he would report to the Council of Ministers and then Cabinet on the urgent matters to be addressed at Kariba.
He said the debt was being dealt with through the Zimbabwe Accelerated Debt, Arrears Clearance Strategy, which was launched in Tunis this year.
Zimbabwe is saddled with an US$8 billion debt, which has hampered foreign direct investment.
After his tour, Minister Mashakada said Kariba South equipment was obsolete and needed urgent attention as one of the key enablers of economic growth and development.
“I have realised that the equipment is old and causing frequent disruptions,” he said. “The SPB is said to be taking longer than usual to respond to the needs of the power station.
“SPB has to be pragmatic and make sure the supply chain is smooth, to avoid power disruptions.”
Kariba South has an installed capacity of 750MW and was expected to increase generation capacity to 1 000MW by 2013 under the MTP targets.
Government is currently working to increase power generation at Kariba by an additional 300MW and construction is expected early next year as valuation of bidders is expected to be complete by the end of the month.
It would cost Zimbabwe US$771 million to add 300MW to the national grid and would take about three to four years.
Minister Mashakada has visited Hwange Power Station and is scheduled to tour the small thermal power stations, Bulawayo and Munyati. Harare Thermal Power Station is currently closed.
The minister said reliable energy was critical for the attainment of economic recovery, growth and transformation.
“Notwithstanding the setbacks, the Government is working on a number of projects to improve power generation, including licensing independent power producers,” he said.
Zimbabwe has an installed capacity of 1 960MW against a national demand of 2 200MW.
Zesa faces operational challenges, including under capitalisation compromised by debt, billing and collection challenges as well as lack of financial resources.
The power utility is also burdened by lack of specialised skills and tools required for planning and forecasting energy needs.
To achieve targets, Minister Mashakada said there was need to invest heavily in the energy sector and to create an investor-friendly legal framework to govern the sector.
Government has also set up an Energy Regulatory Board to implement cost effective tariffs and review systems and processes within commercial operations to enhance billing revenue collection and cash management.
Online Reporter