Zimbabwe to settle its debts to SA and Mozambique on back of US 100 Million Loan

  • Zimbabwe is set to clear its arrears owed to Mozambique and South Africa after securing a US100 million loan facility from Afreximbank.
  • The payment will see the 30-year trilateral energy agreement between Zimbabwe, Mozambique and South Africa revived.
  • Zimbabwe is seeking to open consistent supply channels between itself and the two neighbouring countries as part of immediate-term solutions to stabilise local power supplies.

The trilateral agreement signed in 1990 allows Zimbabwe to negotiate for “firm and competitively priced” electricity from Cahora Bassa and Eskom. The settling of arrears is expected to unlock 550 megawatts (MW) from the regional utilities.

The Government of Zimbabwe has prioritised establishing stable power supplies to drive economic growth. They recently announced that they will be implementing a ‘proper’ Independent Power Programme (IPP) under the funding and supervision of the World Bank. Read more

They have also embarked on a programme to restore full production at the Hwange Thermal Power Station, units three and six, by March 2020. Read more

Zesa and the past ministry failed to renew a primary agreement that was due for renewal in 2012.

“This trilateral agreement provides Zimbabwe first right of refusal to import 500MW of firm power at a very competitive tariff from Cahora Bassa,” said Zesa executive board chairperson, Dr Sydney Gata

Zimbabwe’s current debt to the two neighbouring utilities is US 70 million.

“In respect of Cahora Bassa, it is both to pay for the arrears and also renegotiate an extension of the old agreement. In respect of Eskom, the condition precedent is to pay for the arrears. With EDM is also to pay for the arrears, ”said Dr Gata. He added that part of efforts to improve Zesa’s efficiency, the parastatal would be restructured by mid-March through the re-bundling process.

Zimbabwe’s energy sector is in a dire state due to years of looting and corruption. The country has been plunged in darkness with ongoing load shedding for up to 18 hours a day in some areas. Recently, China suspending the Hwange Power Station refurbishment programme because their bank account was raided to the tune of US 10 million. Read more

African Export–Import Bank, also referred to as Afreximbank, is a pan-African multilateral trade finance institution created in 1993 under the auspices of the African Development Bank. It is headquartered in Cairo, Egypt.

Author: Bryan Groenendaal

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