Makomo coal mining ops under threat. . . as ZPC fails to pay for supplies

Business Reporter
Makomo Resources Limited may be forced to halt its coal mining operations in Hwange as the Zimbabwe Power Company is struggling to pay for substantial supplies of coal.

ZPC, a subsidiary of ZESA Holdings which operates Hwange Thermal Power Station, the country’s largest coal fired electricity plant, has failed to pay for supplies with the debt now estimated at over $20 million.

Makomo director Mr Ray Mutokonyi confirmed the development, saying the capacity to continue operations was being threatened by ZPC’s failure to pay for supplies.

At a time Hwange Colliery Company is facing operational challenges, Makomo Resources has been the major supplier of coal to the station.

Currently, the power station is generating 400MW, compared to its design production capacity of 920 megawatts.

“We have not been receiving payments from ZPC and should this persist, we are likely to significantly scale down production or halt operations,” Mr Mutokonyi said in an interview.

ZESA group spokesperson Mr Fullard Gwasira said the unavailability of the 2016 tariff adjustment has contributed to cash flow challenges, which are largely being driven by upfront payments of electricity imports and large debtors book of over $1 billion.

Zimbabwe is importing power from Mozambique and South Africa to cover for the shortfalls while it is now six months after Zesa proposed a tariff increase, but it is yet to be granted.

“The ZPC and Makomo Resources have a sound business relationship with the latter being one of the key suppliers of coal for electricity generation at our thermal power stations. Owing to the strategic nature of their product to our line of business.

Makomo ranks high on our priority suppliers list due to their provision of the primary fuel for our power stations. And despite the liquidity crunch that is currently prevailing on the market, the available resources are being prioritised to them to ensure that we maintain our relationship and achieve security of electricity supply.”

“We are constantly engaging each other and that’s the reason why the domestic power supply situation has stabilised. However, owing to the confidentiality that binds our relationship, we are not at liberty to disclose every provision of the agreement.”