ZESA Holdings is in the process of mobilising funding to whittle down its debt to South Africa’s Eskom after the value of power imports under a Government guarantee reached the limit of 500 million rand.The situation has presented challenges for ZESA, which has been struggling to make foreign payments due to the foreign currency situation in Zimbabwe.
When ZESA agreed on the power import deal with Eskom, it initially had to pay about $7 million upfront per month, before negotiating a more flexible weekly installment (or around $1.7 million) as foreign currency became elusive.
“ZESA is looking at ways of raising funding. The funding is meant to support operations, but will have a component for repaying the debt to Eskom. The problem (with the Eskom debt) is that ZESA is not getting enough foreign currency allocations from RBZ,” a source said.
Attempts to get official comment from ZESA were not successful at the time of going to print, but sources privy to the developments confirmed that the power utility was working flat out to clear the debt to Eskom.
Eskom in terms of the guarantee extended by Government, without having to pay for the imports upfront.
In fact, Eskom demanded the Government guarantee after noting that Zesa Holdings was struggling to keep pace with the debt arising from the power it was getting from its South African counterpart.
Highly placed sources told The Herald that the power utility had come up with a proposal on how it intends to pay off the debt to Eskom, about $35 million. The funds sought would cover other areas of operations.
ZESA has a non-firm agreement with Eskom in terms of which it can import up to 300 megawatts, depending on the situation in South Africa, mean Eskom may not export if local demand is too high.
Sources said, however, that Zesa has since submitted a debt clearance proposal to Eskom, while at the same time working on mobilizing funding through various unnamed means to clear the debt.
As Zesa struggled to make foreign payments and the debt to Eskom ballooned and exceeded the guarantee provided by Government, Eskom is said to have expressed reservations to the extent that it, allegedly, once contemplated cutting supplies to Zimbabwe.
Secretary for Energy and Power Development Patson Mbiriri recently indicated that Eskom was no longer insisting “on its pound of flesh”, in terms of which ZESA would have to pay first before getting the power. But he pointed out that the power utility pays upfront as and when it has the funding ready for such an option.