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Measures have been taken by the Confederation of Zimbabwe Industries to alleviate the debilitating power crisis that continues to cripple industrial production
The Confederation of Zimbabwe Industries (CZI) made proposals that they feel if implemented could alleviate the power crisis haunting industry and drive economic growth. CZI President Joseph Kanyekanye presented the proposals at the recent Zimbabwe 2012 economic outlook symposium in Harare.
The CZI is currently engaged in a legal battle with the monopolistic Zimbabwe Electricity Supply Authority (ZESA) over the imposition of electricity tariffs that are crippling production. Some of the issues CZI is raising with the minister of Energy and ZESA include imposition of new tariffs and that ZESA cannot give clear justification on generation costs.
Kanyekanye said mismanagement and an ineffective ZESA board and regulation issues are affecting industry. Industry is also lamenting the Rural Electrification levy. Some say that the six per cent surcharge on top of the electricity bill results in an increase in ZESA charges. Kanyekanye said to alleviate some of the challenges they are facing it is critical to ensure that the availability and cost of credit do not constrain economic activity.
"The current situation in terms of accessing credit lines is definitely hampering economic activity,” said Kanyekanye. “The terms do not allow for the much needed infrastructure developments. The Multi-Donor Trust Fund must be activated."
CZI believes that subject to the government's speedy signing and ratifying of BIPPAS, US$2bn to US$5bn can be generated. This will be revolving credit administered by local and international banks with the participating governments giving guarantees to mitigate risk and encouraging banks to lend directly to Zimbabwean firms.
The Botswana line of credit gives up to five years to pay with minimum loans of US$500,000. Other proposed measures include securitisation to include a secondary bond market. Kanyakanye also called for the syndication of pension funds to direct resources to power through the minister of finance. He said that restoring relations with the West would facilitate asking for help from the World Bank and the IFC. He also called for the government to deal with the sanctions issue. CZI also advocated that syndicates import power in a way to bypass the ZESA debt overhang.
"Single shift operations must look at working at night only for instance during off peak when power is available and cheap," Kanyekanye said. He added that within the region, only Zimbabwe appeared to have severe black-outs at night, suggesting ZESA inefficiency as cited by the Competition Commission or due to poor cash-flows to support imports.
Kanyekanye said the Competition Commission must veto monopolies: "Impasse between ZESA and Greenfuels point to poor regulation and the lack of urgency and national interest urgency," he said.
Other measures cited included: promoting Demand Side Management resulting in replacement of incandescent bulbs with Compact Fluorescent lamps (CFLs) to reduce electricity usage, increasing domestic tariffs and prioritising industry to get a minimum 18 hours a day via load shedding. Kanyekanye said Zimbabweans must work shifts at night to reduce costs and enhance competitiveness. CZI called for the breaking of the ZESA monopoly and urged ministers to work for the national good rather than their personal feelings.
Kanyekanye said government must move towards employing advisers to ministers and that tariffs must match the level of service provision and liquidity rather than pricing inefficiency. "This will result in avoiding an absurd situation were ZESA hiked prices on top of unrecoverable debtors," he said.
CZI called for the dissolution of the ZESA board and for the new ZERA to publish regulation principles and repeal improper tariffs done outside stakeholder consultations as provided by the Electricity Act. CZI also called for the activation of Clean Development Mechanism (CDM) projects.