ZESA demands forex payment from miners

By Staff reporter | 25 May 2019 at 20:56hrs
The Reserve Bank of Zimbabwe (RBZ) is set for a collision course with big mining companies over the current foreign currency retention threshold amid revelations that the power utility, ZESA Holdings, is demanding payment of its bills and outstanding liabilities in forex, Business Times reported.

A source close to developments told Business Times that ZESA has been engaging miners to have bills and some liabilities settled in foreign currency, a move which is being resisted by the miners.

"Zesa recently approached two big mining companies, (gold and platinum) demanding part payment of liabilities and bills using foreign currency," said the source.

This comes as power utility has lined up a number of measures, which include mobilising US$80m to clear arrears with Eskom of South Africa and Mozambique's Hidroelectrica de Cahora Bassa in a bid alleviate rolling power outages and load shedding.

Payment of the US$80m arrears is expected to unlock more power imports, which have gone down to 150MW from 450MW.

However, the move by the power transmitter has been met with resistance from the miners who have now made louder, their calls to RBZ to revise upwards, foreign currency retention thresholds.

According to the RBZ foreign currency retention thresholds, big gold mining firms are expected to retain 55 percent while the other miners are mandated to retain 50 percent of their foreign currency. The retained funds have to be liquidated in 30 days.

Mines representative body, Chamber of Mines Zimbabwe (COMZ) says it is engaging the apex bank on issues relating to thresholds to make sure that they are adequate to meet the import requirements for the industry. Initially gold was retaining on average below 10%, but this was raised to 55%.

Zesa Holdings spokesperson Fullard Gwasira could neither confirm nor deny claims the power utility wants to bill miners in foreign currency.

"I can neither confirm nor deny your assertion suffice to say that we are working tirelessly, and all options are on the table to make sure that the lights stay on," Gwasira said.

COMZ CEO Isaac Kwesu told Business Times payments were between the miners and power utility and the chamber "can only act when a dispute has ensued".

A chrome miner who could not be named said there were ongoing discussions between the power utility and miners to have some bills and liabilities settled in hard currency.

Zimbabwe is currently battling electricity shortages following a sharp decline in water levels in Kariba Dam due to erratic rains in the 2018-19 rainfall season, and generation constraints at Hwange Power Station because of aging equipment.

Zesa Holdings subsidiary, Zimbabwe Electricity and Distribution Company (ZETDC) is struggling to collect about ZWL$1,07bn it is owed by defaulters.

The biggest culprits are local authorities and domestic consumers who respectively owe ZWL$344m or 32 percent of the debt and ZWL$263m or 24 percent of the total debt.

Farmers come third, owing the ZETDC ZWL$124m or 12 percent, industry (ZWL$97m or nine percent), mining (ZWL$81m or eight percent) and parastatals owe ZWL$45m. Other government departments owe ZWL$21m or two percent of the total debt.

This means the power utility is grappling with negative working capital, and is losing a huge amount of electricity during transmission.

It is also battling high maintenance costs and low reliability of supply due to its aged infrastructure. Currently the ZETDC has a critical shortage of transformers, resulting in the company losing about ZWL$9m a year in potential revenue .



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