Power: New stations must be a priority

expensive since they rely on coal railed down from Hwange.
Imports from Mozambique and the DRC are helping, but Zambia and South Africa, once major exporters, now need everything they generate for home consumption. Imports are more likely to decrease than increase as our neighbours see their economies grow amid a Southern African power pool deficit.
So Zimbabwe is going to have to build more power stations or go into partnership with other countries in the region to build power stations with guaranteed capacity for Zimbabwean needs.
But power stations are very expensive. Zesa has no money to add to its stock at the moment and until it sorts out its billing and collection, and that will not happen until it makes pre-paid meters for domestic consumers universal, no bank will lend the huge sums needed for a new station. Banks will want to see evidence that loans can serviced.
Zimbabwe is, however, fortunate in its energy laws. Right back in the 1990s when Zesa was re-organised, legal provisions were made for private power stations. Zesa needs to own the grid, but anybody can own a power station. The Zimbabwe Electricity Regulatory Authority has the authority to licence such private stations, setting the tariffs they can charge Zesa who would buy their output wholesale to retail to consumers through its distribution grid.
One licence, to RioZim, has already been granted for the Grass Roots station in the Sengwa area. Nothing has been done to activate that licence, although the company has started mining coal at the field, and nothing is likely to happen in the power field in the foreseeable future considering the capital problems facing the licence holder.
Now a Mauritian company, the same one that is renovating Zisco, has applied for a licence for a second station at Hwange. The colliery company reckons it can mine more coal and the new station would be very easy to put on the national grid, since it is so close to the existing Hwange station.
The station could also export power easily since nearby Namibia and Botswana are both importers. It will not face downtime. The costs of the power it generates could, therefore, be lower than those produced by other proposed stations. We imagine that Zera will have to look at two critical factors when considering the licence application: the fact that this station is likely to be foreign owned and the sort of charges its owners will need to make in order to make their station viable.
Foreign ownership should not be a critical factor. Zimbabwe already has to import from foreign owned stations and at least would have first call on a station in Zimbabwe; in any case it should be possible to figure out how shares in the station could gradually be sold to Zimbabweans over a set number of years.
We need to remember that we need more power now, not when we can afford to build our own stations. If Zambia or South Africa could resume exports we would import more. Accepting foreign investment now is not going to make things worse.
The pricing formula is likely to be difficult to calculate. Investors should receive a fair return on their investments but Zesa needs to go further. The return should be fair for a well-managed station, with no guarantee that a badly-managed station can produce an automatic profit. So a simple cost-plus formula cannot be used. But more and more countries are putting private stations on their grids so Zera should be able to find some sort of acceptable formula that gives an attractive return for a well-managed station.
What is of over-riding importance is to get new stations on the grid as quickly as possible. Southern Africa’s power deficits are not going away. They are becoming worse. South Africa is building new stations, Zambia is renovating and expanding stations, Botswana is actively thinking about using its huge coal reserves in a station, Namibia is becoming a world leader in wind power and the DRC is actively pursing decades-old plans to continue developing the Inga site.
And yet if the region is to hit and maintain 10 percent growth, a desired and achievable objective we need ever more stations. So Zimbabwe can no longer sit back. Every reasonable idea must be pursued and both local and foreign investors must be encouraged to think about building stations and plugging into our grid.