by Fredrick Ngugi, at 01:00 pm, May 11, 2017, Business

SA Threatens To Cut Off Zimbabwe’s Power Supply Due To Unpaid Debt

South Africa has threatened to cut off its power supply to Zimbabwe by the end of May if the latter doesn’t clear an outstanding debt of about $40 million.

In a letter addressed to the Zimbabwean state-run power company ZESA, Matshela Koko, South Africa’s power utility company Eskom CEO, warned that the company will reduce its electricity supply to Zimbabwe by 300 megawatts per day from June due to its ballooning debt.

This reduction will ultimately have a devastating effect on Zimbabwe’s economy, whose power consumption is estimated to be about 1,400 megawatts per day, according to The Herald.

According to a repayment plan, which included arrears from 2016 and was established by the two entities last year, ZESA should have paid $89 million between January and April, but it only managed to pay off $46 million, leaving a debt of $43 million.

“The balance as at end of March 2017, according to the plan, should have been R484 721 980, but the actual balance was R603 176 479, leaving a shortfall of approximately R118 454 499,” Mr. Koko said.

“It is unfortunate that ZESA has not been able to adhere to this payment plan.”

Enough Leniency

ZESA reportedly owes regional power suppliers a huge amount of money, with the major creditors being Eskom and Hydro Cahora Bassa of Mozambique, which is owed $40 million.

In the letter, which was sent on April 24th, Mr. Koko warned ZESA that “no further lenience or accommodation” would be accorded to Zimbabwe from June 1 with regard to the unsettled debt.

He called upon Zimbabwean authorities to ensure the repayment plan was restored as soon as possible to avert the looming power rationing.

For its part, ZESA, through its Chief Executive engineer Josh Chifamba, confirmed the existence of the outstanding debt, but assured its customers that everything was “under control.”

Chifamba further revealed that the company is getting financial support from the Reserve Bank of Zimbabwe and some of its customers who are into exports to offset the debt.

“We are confident that the issue will be resolved in good time to avert disruption to power supply,” said Chifamba.

Zimbabwe is currently suffering from one of its worst economic recessions in its history, with many Zimbabweans blaming the dire situation on the “poor leadership” of their 93-year-old President Robert Mugabe.

The South African country has been forced to reintroduce bond notes to replace their devalued local currency – a move that has caused panic among citizens who now fear that the country could be headed back to the 1998 economic crisis that rendered everyone poor.

Yet, Mugabe insists on ruling the country for another term despite his failing health and style of leadership.

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