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Business Reporter
THE Zimbabwe Power Company (ZPC) and coal producers are engaged in negotiations over product pricing aimed at ensuring viability of the sector.
Of late, coal suppliers through their representative body, the Coal Producers Association, have been lobbying for a sustainable pricing structure, with the option of being paid in forex also tabled.
The producers have complained that the inflationary business enviroment has seen them getting reduced value for their product, which at times is also worsened by delays in payment for coal deliveries by ZPC, the largest consumer of coal.
Finance and Economic Development Minister, Professor Mthuli Ncube, acknowledged the on-going deliberations in his 2020 mid-term budget review statement presented last week.
He stressed the need to ensure speedy conclusion of the negotiations around coal pricing between ZPC and the producers saying the matter was “constraining supply” and hoped that a resolution will be arrived at soon. As such the minister said propositions have already been made for ZPC to ensure “indexing of electricity pricing to inflation and exchange rate in line with any developments on inflation and foreign exchange market.”
The concern over coal pricing was raised by the companies during President Mnangagwa’s tour of the coal mines in Hwange last Thursday and Friday. In response the President assured the miners that their grievances would be urgently attended to so as to ensure uninterrupted production.
“The coal sector is the corner stone of the country’s energy generation and contributes to exportation of coke for global industrial processes.
Meanwhile, work on the construction of the US$1,4 billion Hwange Thermal Power Station expansion project set to add 600MW to the national grid is now 45,7 percent complete against the planned 54,4 percent, said Prof Ncube.
Expansion of Hwange Thermal Power plant is critical to reducing the country’s power supply gaps as well as the electricity import bill. The project has been stalled by the Covid-19 pandemic.
“In the energy sector, most of the work stalled during the last months due to the Covid-19 pandemic. Progress on construction of Hwange 7 and 8 power project stands at 45,7 percent against the planned progress of 54,4 percent,” he said.
“Taking into account the current challenges and revised plans the project is now expected to near completion by year end.”
In light of the prevailing power challenges, Prof Ncube said ZPC was working on ensuring an average generation capacity of 450MW at Hwange. The expansion project entails civil, mechanical and electrical works, chimney and cooling tower construction.
Before Covid-19 disruption in February, workmen were almost completing truss columns with about US$290 million having been drawn down for the civil works with the bulk of the money expected to be spent on the electro-mechanical works, mainly the huge boiler-turbine-generator-transformer sets and the associated coal feed and piping.
Prof Ncube said Zesa was also working on minimising generation losses through ensuring that the country’s three small thermal power stations, Munyati, Bulawayo and Harare produce an average of 22MW, 25MW and 15MW respectively.
The expansion of Hwange Power Station is critical, as the project is an enabler for future investments and enhancing the quality of life of ordinary citizens.
The extensions were originally planned for the 1990s but were continuously postponed as Zesa switched to ever-increasing imports instead.
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