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Financially Distressed Zimbabwe Utility Warns Of Wider Power Cuts

The Zimbabwe Electricity Supply Authority has declared that it cannot service debts of Z$105 billion dollars and that the country faces widened power interruptions.

ZESA Acting Chairman Christopher Chetsanga told a news conference in Harare on Tuesday that Zimbabwe must brace for further power cuts. He informed journalists that the company plans to lay off 600 workers to reduce expenses. Some workers at the parastatal went on strike in December and about 150 were dismissed.

Chetsanga said the cost of keeping the utility running and reasonably functional exceeded the revenue it received from government-approved tariffs. He said it costs ZESA Z$90 to produce one kilowatt hour which is sold for Z$5, meaning a loss of Z$85 on every kilowatt hour the troubled company produces and sells.

It imports power at two U.S. cents a kilowatt hour and sells it for two tenths of a U.S. cent per kilowatt hour - the lowest-priced power in the region, he noted. That means a loss of 1.8 U.S. cents per kilowatt hour imported and distributed.

Chetsanga revealed that ZESA has only secured capacity of 150 megawatts from regional suppliers, whereas its requirement is for 650 megawatts.

ZESA imports electricity from South Africa, Mozambique and the Democratic Republic of Congo to meet national requirements. Chetsanga said the utility is lining up US$30 million in new investment from investors whom he did not identify to resuscitate the coal-fired power station at Hwange, which is putting out just 350 megawatts of a capacity of 780 megawatts, and the Kariba hydro-electric station.

Chinese and Russian investors have expressed interest, Chetsanga said. He said he hoped the financing could be lined up in the first half of 2007 so that the project could be completed in the period 2008-2010 at a total cost of some US$800 million.

Economist John Robertson told reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe that the persistent shortage of foreign exchange in the country has exacerbated the plight of the national power utility.

More reports from VOA's Studio 7 for Zimbabwe...