admin
Elliot Ziwira Senior Writer
In colonial Rhodesia only four companies had the opportunity to participate in the oil industry. Through ownership of fuel storage reservoirs throughout the country, the multinational companies enjoyed monopoly in the sector.
Between 1942 and 1980 electricity services were the prerogative of Local authorities under settler domain. Consequently, policies were in favour of whites, blacking out Africans.
At Independence in 1980, the Government of Zimbabwe, through the Ministry of Transport and Power, changed game rules in the energy and power development sectors by enacting legislation to correct colonial imbalances.
The ministry started as department in the Ministry of Transport and Power, before moving to the Ministry of Energy, Water and Development in March 1988. Following the enactment of the Electricity Act of 2002, it was afforded full ministerial status. The Act created the Zimbabwe Electricity Regulatory Commission, and provided a legal framework for the unbundling of the State-owned utility, ZESA.
Upon the ministry’s establishment, three technical departments were formed; responsible for power development and petroleum development. There was also an Energy Conservation and Renewable Energy Department.
State enterprises and parastatals, Statutory Bodies and grant aided institutions under the purview of the ministry are; Zimbabwe Energy Regulatory Authority (ZERA); Zambezi River Authority (ZRA); ZESA Holdings (Pvt) Ltd, Zimbabwe Electricity Transmission and Distribution Company (Pvt) Ltd, (ZETDC), ZESA Enterprises (Pvt) Ltd, (ZENT), Powertel Communications (Pvt) Ltd), Zimbabwe Power Company (Pvt) Ltd (ZPC): Kariba Hydro, Power Company (Pvt) Ltd, Hwange Electricity Supply Company (Pvt) Ltd; Rural Electrification Fund (REF); National Oil Company of Zimbabwe (Pvt) Ltd (NOCZIM); Petrotrade (Pvt) Ltd; National Oil Infrastructure Company Holdings (Pvt) Ltd (NOIC): PetroZim Line (Pvt) Ltd, Genesis Energy (Pvt) Ltd; associate companies: Ethanol Companies of Zimbabwe, Inpetro; and Finealt Engineering (Pvt) Ltd.
The Ministry of Energy and Power Development is headed by Honourable Fortune Chasi who is deputised by Honourable Magna Mudyiwa. Dr Gloria Magombo is the Permanent Secretary.
Mandate
Motivated by the vision to be a world class provider of energy services by 2030, the Ministry of Energy and Power Development’s obligation is to provide a conducive environment for the availability of adequate, efficient, reliable, affordable and sustainable energy to all citizens of Zimbabwe through formulation and implantation of effective policies and regulatory frameworks.
The ministry derives its mandate and functions from seven Acts of Parliament, namely; Electricity Act (Chapter 13:19) of 2002, Petroleum Act (Chapter 13:22) of 2006, the 2002 Rural Electrification Fund Act (Chapter 13:20), 1987 Zambezi River Authority Act (Chapter 20:23), Energy Regulatory Authority Act (Chapter 13: 23) of 2011, 1962 Mozambique Feruka Pipe Line Act (Chapter 13:07), and the Pipeline Act (Chapter 13:08).
The Ministry of Energy and Power Development also administers the Energy Policy of 2012, Renewable Energy Policy of 2019 and 2019 Bio Fuel Policy.
Functions
Driven by such values as teamwork, honesty, integrity, respect and commitment, the ministry’s purposes are to formulate energy and power development policies; develop a legal and regulatory framework for the energy sector; monitor and evaluate the implementation of energy and power development policies and programmes; initiate and implement reforms in the power and petroleum sectors; plan and coordinate energy supply and power development options; and attract investment in the sector.
The ministry oversees State enterprises and parastatals in the energy sector; and endeavours to promote the development and efficient utilisation of renewable and non- renewable sources of energy; promote the use of energy efficient technologies and techniques; develop a database on energy use technologies and investment opportunities and disseminate such information; facilitate the implementation of research and development findings in the sector; and monitor and evaluate energy projects and programmes.
Historical background
Colonialism was hinged on exploitative machinery which led to the establishment of towns and mines. The growth of settler capital culminated in demand for power to drive equipment, hence the slant towards electricity that dates back to the early 1900s in the case of Rhodesia. In 1938, the Electricity Supply Commission (ESC) was formed as an integrated utility to provide power to local authorities, farmers, rural communities and industries.
Around 1960 Central African Power Corporation was established to generate power from north and south banks of Kariba Dam. During this time small thermal power stations were built, including Harare Power Station between 1942 and 1955, Munyati Small Thermal Power Station in 1946 and 1957, while Bulawayo Power Station was built between 1947 and 1957. These stations were crucial in the provision of electricity to strategic industries under each local authority.
As has been alluded earlier on, only four players enjoyed monopoly in the oil industry before 1980. The four companies operated the Government-owned Beitbridge Fuel Storage Point, importing fuel through the southern border from National Petroleum Refineries of South Africa Limited (NATREF).
Fuel supply was the preserve for the four major oil traders with government having little influence over them. However, government owned Feruka Storage Point, which received its fuel supply by road and rail through Beitbridge as the Mozambique route was inactive due to the security situation then. In the 1960s a pipeline was constructed for the purposes of transporting crude oil from Mozambique into Rhodesia. The Rhodesian government granted Central African Petroleum Refineries (Private) Limited (CAPREF), jointly owned by Total, BP and Shell, permission to construct a refinery at Feruka for the purification of oil products, which, however, only operated for a year; from 1965 to 1966.
Embarking on the journey
Since its inception the Ministry of Energy and Power Development has changed the matrix in the energy sector.
There are different sources of electricity in Zimbabwe; thermal, hydro and renewable.
The largest coal-fired station in the country is Hwange Power Station, built in stages with the first 4 x 120MW commissioned between 1983 and 1986. The station has a nameplate capacity of 920MW. Stage 2 Units (2 x220MW) were later commissioned in 1987. The station used to get its coal from HCCL through a 6km conveyor belt. Hwange Power Station is being expanded to add an additional 300MW to the national grid. Started in 2018, the project is now at 55 percent completion level with the first unit expected to feed the grid before the end of 2021.
The Kariba Hydropower Plant was built in 1959. The first generator was commissioned on May 17, 1960. The station was upgraded from a capacity of 666MW to 750MW (between 1999 and 2002). Through an expansion project, two new units were commissioned in March 2018 bringing the installed capacity to 1 050MW.
Work in progress include the refurbishment of the dam plunge, pool and the spill gates by the Zambezi River Authority (ZRA). Generation has been affected by low water levels in the Zambezi River and reduced water allocations by the Zambezi River Authority.
Another hydro project is Batoka. The Batoka Hydro Project came on the backdrop of the ex-CAPCO debt resolution in February 2012 which paved way for its development. In 2019, the governments of Zambia and Zimbabwe awarded the contract to develop the 2 400MW project on a BOT arrangement.
It is worth noting that in the electricity sector, there has been an improved energy access and electrification rate of 42 percent.
In 1985 the Electricity Act 13:05 provided for the establishment of the Zimbabwe Electricity Supply Authority (ZESA), which was an amalgamation of the local authorities, Electricity Supply Commission (ESC) and Central African Power Corporation.
In 1986/7 electricity activities were integrated into ZESA resulting in the amalgamation of Local authorities and the Electricity Supply Commission’s ventures at Munyati, Hwange and Central African Power Cooperation (CAPCO) at Kariba.
Local authorities lost the privilege to distribute electricity in 1987.
Following the enactment of the Electricity Act (Chapter 13:19) in 2002, Government established the Zimbabwe Electricity Regulatory Commission (ZERC) to regulate the power sector in 2005.
ZESA was unbundled into five successor companies to allow private sector investment in electricity generation through licensing of independent power producers (IPPs).
The Rural Electrification Fund Act (Chapter 13:20) of 2002 allowed for the creation of the Rural Electrification Fund Board whose main objective was to ensure rapid electrification of rural areas.
To date the Rural Electrification Agency (REA) has electrified about 9 407 rural institutions countrywide through the six percent levy imposed on electricity consumers. Public institution are connected through a 100 percent support scheme while other customers receive a 60 percent subsidy from Government.
In 2011, an all-encompassing Energy Regulator, the Zimbabwe Energy Regulatory Authority ZERA was formed in terms of the Energy Regulatory Authority Act (Chapter 13:23) of the same year. Its major role was to regulate the procurement, production, transportation, transmission, distribution, importation and exportation of energy regardless of source.
To date the Regulator has licensed more than 50 IPPs with a combined capacity of more than 5 000MW. In the petroleum sector, a total of 700 outlets have been licensed. Following the unbundling of ZESA in 2002 the following companies were formed; ZPC, ZETCO, ZEDC, ZENT and Powertel. However, in 2008-ZEDC and ZETCO were bundled to ZETDC, and in 2012 a proposal to restructure the ZESA Group according to the energy policy was initiated, but did not come to fruition. In 2018 a decision to re-bundle the Group and move Powertel to the Ministry of Information Communication Technology, Postal and Courier Services was approved and is being implemented.
In rural areas the focus before Independence was to meet electricity demand for commercial farmers and mining areas. Very few Rural District Councils (RDCs) were electrified then.
Following Government directive, ZESA (then ESC) embarked on the Rural Electrification Programme in May 1984. Under Phase 1 of the project, the target was to electrify 23 rural growth points, with Phase 2 targeting to electrify a further 48 rural centres. However, by 1987 only 36 centres out of a targeted 73 had been electrified.
By 1997, 48 out of 57 rural district centres, and 157 out of 590 rural service centres had been electrified across the country.
In 2002, the Rural Electrification Programme was stretched to cover rural public institutions such as schools, health centres, Government extension offices, rural villages and households, chiefs’ homesteads as well as A1 and A2 farms.
Milestones have also been achieved in the petroleum sector.
The Government of Zimbabwe and Companhia do Pipeline Mocambique-Zimbabwe Limitada (CPMZ) signed an agreement in 1982, which resulted in the CPMZ converting the Beira-Feruka pipeline from conveying crude oil to refined fuel. Today the Beira-Feruka pipeline is the primary mode of fuel transportation into the country, accounting for 95 percent of imports, with road and rail accounting for the remainder. Having been converted, the pipeline has been ferrying refined oil products since 1983.
The Government established the National Oil Company of Zimbabwe (NOCZIM) in 1983 as the sole importer of fuel into the country.
The year 1994 saw a joint venture company, Petrozim Line (Private) Limited being formed by NOCZIM and LONMIN (then LONRHO), to construct and operate a petroleum products pipeline from Feruka (Mutare) to Msasa (Harare) and, storage facilities at Msasa Depot which enabled the country to load fuel out of Msasa. Fuel supply no longer terminate at Feruka as was the case in the past. In 2019, NOIC acquired all the Lonmin shares in the pipeline, thus becoming the sole shareholder, giving the Government total control over this strategic asset. The Msasa Depot has the capacity to pump six million litres of fuel per day. It is primarily a transit depot as fuel is distributed from there to the market. In 1994 the Government constructed an underground multi product storage facility with a total capacity of 360 million litres at Mabvuku Depot, the single largest fuel storage facility in Southern Africa.
Moreover, the fuel industry was opened up to indigenous players in 2003 as the Government deregulated the sector. A number of companies with access to foreign currency were issued with permits, and allowed to import fuel to boost imports. The move gave local oil companies a chance to participate, some of which have managed to expand and effectively compete with multinational corporations.
Furthermore, the Petroleum Act (Chapter 13:22) was promulgated in 2006 to govern the regulation and licensing of the fuel industry. Initially, the ministry was the licensing authority before formation of a Regulator, assuming the regulatory role for the fuel industry, including determination and control of prices.
In order to further improve operational efficiency, Government unbundled NOCZIM in 2010. As a result the National Oil Infrastructure Company of Zimbabwe (NOIC), mandated with the responsibility of managing the fuel pipeline and related storage facilities, and Petrotrade (a fuel marketing company) were formed.
The establishment of the Zimbabwe Energy Regulatory Authority (ZERA) in 2011 was a game changer in the energy sector, fuel industry included. Oil companies in Zimbabwe are registered under five categories; producers, importers (procurement), wholesalers, blenders and retailers. In 2012, the ministry convinced international oil traders to bring their fuel to bonded storage in Harare, instead of stationing it in Beira.
This arrangement reduced the turnaround of local oil companies with regards to procurement, as they now get their fuel from Msasa or Feruka, instead of Beira.
Production and blending of ethanol that started in the colonial era as a means of substituting petrol imports on the backdrop of international sanctions, also received a major boost in recent years. The production of ethanol was suspended in 1992 due to drought.
Following the establishment of Green Fuel Chisumbanje ethanol production plant in 2011, Government resuscitated ethanol blending. Triangle also produces ethanol, but at a much smaller scale as compared to Green Fuel.
The maximum blend mandate allowed at law is E20 (80 percent petrol: 20 percent ethanol).
Ethanol blending has a lot of benefits, chief among them being: improved security of fuel supply; import substitution/foreign currency savings; community development, mainly in the form of social responsibility activities in areas where ethanol is produced; employment creation; and reduced environmental pollution since ethanol is a cleaner fuel.
In 2017, the Government expanded NOIC’s mandate to include fuel and ethanol trading. Subsequently, through a joint venture with Triangle Limited, NOIC formed a company, the Fuel Ethanol Company of Zimbabwe (Private) Limited (FECZ) whose obligation is the production of ethanol for mandatory blending purposes. NOIC also incorporated Genesis Energy (Private) Limited, a company mandated to trade in fuel.
To ensure adequate storage capacity for ethanol, NOIC is constructing a six million-litre ethanol storage facility at Mabvuku Depot to augment the company’s existing capacity of 5,2 million litres.
In 2015, the Government, through NOIC, constructed a fuel loading gantry at Mabvuku Depot which is bigger than the Msasa one, with a maximum daily loading capacity of six million litres per day, compared to Msasa’s four million litres.
Since Independence in 1980 many filling stations have been constructed countrywide. To date there are 700 filling stations countrywide.
The ministry, through its fuel trading companies, Petrotrade (Pvt) Limited and Genesis Energy, has a wide network of filling stations nationwide.
In 2005, the Government established a special purpose vehicle for the production of biodiesel under the National Biodiesel Programme based on growing and processing jatropha seeds into biodiesel. The programme sought to improve on energy security, provision of import substitution, employment creation opportunities in research, feedstock production, processing and retail.
Looking into the future:
Renewable energies
Renewable energy electricity generation has traditionally been dominated by bagasse at Triangle and Hippo valley estates. Electricity from cogeneration was used and is still used for own consumption with excess power fed to the grid. Recently, Green Fuel has been generating electricity from sugarcane bagasse.
Use of solar energy has increased over the last two years. Over 20MW are expected to be fed into the installed grid before end of 2020.
Policies have been put in place to encourage use of renewable energies. These are the Electricity Act of 2003 that resulted in the liberalisation of power generation. The Act allows independent power producers (IPPs) in the renewable energy sector to generate and supply power to the national grid.
Also, in 2019, the Government approved renewable energy and biofuels policies which seek to speed up the adoption of renewable energies by opening up the energy space to private players.
To date more than 10 IPPs are operating in the renewable energy sector. Moreover, five other small solar power plants expected to feed an additional 14MW into the national grid are under construction.
Private companies and individuals have also installed rooftop systems at their properties as a result of the new policy regime.
Available electricity from renewables is about 135MW which is fed into the national grid. This means that renewable energies contribute about six percent to the total electricity supply in Zimbabwe, excluding large-scale hydropower from Kariba.
Alive to the challenges being faced in the power sector, the Government took measures which are being adopted to improve supply situation in the country. These measures are; power imports and bi-lateral engagements; restoration of value to ZESA (cost reflective tariffs); restructuring of ZESA; refurbishments of existing power plants; and licensing of independent power producers (IPP projects). Other mechanisms are removal of duty on solar equipment; initiating of a National Integrated Energy Resource Plan (NIERP); restructuring of the petroleum industry; signing fuel financing arrangements; pushing direct fuel imports (DFI); and putting in place a national fuel monitoring system.
Energy efficiency initiatives
The Government has put in place energy efficiency mechanisms which include the migration from postpaid to pre-paid meters. The initiative has gone a long way in improving energy efficiency at household level. More than 650 000 meters have been installed in the past five years. Also, mandatory solar water heating regulations introduced in 2018 compel households to install efficient solar geysers in place of inefficient electric geysers; and use of energy savers. A statutory instrument of 2017, has ensured that energy efficient light bulbs are used in households and in the commercial sector.
Online Reporter