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FILE: In this Tuesday, Dec. 20, 2016 photo, a man takes time to sit down after waiting for hours in a bank queue in Harare. (AP Photo/Tsvangirayi Mukwazhi)

Nelson Banya

* Factories, mines crippled by 18-hour power cuts

* Zimbabweans endure worst economic crisis in a decade

* Drought, ageing generators worsen electricity shortage

By Nelson Banya

HARARE (Reuters) - Around 9 p.m., a siren pierces the pitch-black night at the Willowvale industrial park in Zimbabwe, signalling that power has been restored after a day-long outage.

Moments later, eight men in blue overalls walk into a factory and begin shovelling a mound of gypsum into a drying machine to make wall plaster.

Zimbabwe’s worsening power shortages have effectively turned day into night for many businesses, with most work happening well after dark, when lights flicker on for a few hours.

For families, it is the same. Cynthia Chabwino, 32, is a mother of four young children. By the time the lights come on at her modest home in Hatcliffe township, on the outskirts of Harare, they are all fast asleep and she has a few hours to complete the household chores.

Chabwino begins her nocturnal routine by fetching water from an electric-powered borehole for use the next day. By 10 p.m., the line of women and children stretches more than 50 metres (yards).

She then converts a small coffee table in the middle of her living room into an ironing board and starts pressing the children’s uniforms for school the next morning.

“Our lives have become unbearable,” she said. “We are always tired now, but what can we do?”

The southern African country is producing just half of its 1,700 MW peak demand, the result of a prolonged drought that has reduced output at its largest hydro plant and ageing coal-fired generators that keep breaking down, according to state-owned power utility ZESA Holdings.

The company has imposed rolling blackouts that last up to 18 hours a day, crippling factories and mines and compounding the country’s worst economic crisis in a decade.

Zimbabwe’s economy, initially forecast to grow 3.1% this year, is now expected to contract, Finance Minister Mthuli Ncube said on Thursday, without providing a figure.

Annual inflation surged to 175.66% in June, eroding earnings and stirring memories of economic chaos under former president Robert Mugabe, when hyperinflation forced the country to abandon its currency in 2009.

The hope that greeted Mugabe’s ousting in 2017 has now turned to despair as his successor Emmerson Mnangagwa struggles to revive the economy and ease shortages of electricity, fuel, medicines and bread.

The government says it plans to import power from its neighbours for now, expand and build new generation plants in the future and encourage off-grid power such as solar for consumers.

SEVERE IMPACT

The power cuts have cost manufacturers more than $200 million in lost production since June, according to the Confederation of Zimbabwe Industries and Zimbabwe National Chamber of Commerce.

The country’s largest mobile operator Econet Wireless said in July it was struggling to maintain its network.

It said 1,300 base stations, a quarter of its total, now run on diesel generators for over 18 hours a day, burning 2 million litres of fuel every month and adding to its operating costs.

But it is small firms such as Moses Chipurura’s plaster factory - which provide much-needed employment in a country with a jobless rate above 90% - that bear the brunt of the outages.

“It is a very tough time indeed,” Chipurura told Reuters, barely audible as humming conveyer belts moved the fine, powdery building material for packaging at the industrial park.

Like many business owners, Chipurura, 41, has been forced to flip to a night shift at Plaster Centre in the capital, Harare.

Before the power cuts, the plant produced about 20,000 bags of wall plaster a month, he said. Production has now dropped to below 7,000 bags. But he still pays his 24 employees their full salaries, even though they only work six hours some nights.

He has installed a generator to try to keep up with orders. But he can only run it for four hours before it needs to cool down. However, diesel, like electricity, is in short supply.

“Running a plant of this magnitude on diesel definitely means I’m going to be forced to increase my prices,” Chipurura said.

“For now, we are absorbing the costs because the market is already under pressure from inflation. I do not know how long we can do this, though.” he said. “The past couple of months have been a nightmare.”

“WAY OF LIFE”

Zimbabwe’s only immediate hope to ease the electricity crisis lies in imports. The government on Tuesday said it had started importing 300 MW from a regional power pool and was negotiating for an additional 400 MW from South Africa.

Zimbabwe’s energy regulator is also raising electricity tariffs to enable loss-making ZESA to make much-needed repairs.

In the long term, China’s Sinohydro Corp plans to add another 600 MW at the Hwange thermal station, while Zimbabwe and Zambia will start building a 2,400 MW hydro power plant next year.

But for now, the prospects of an end to the rolling blackouts appear dim.

The relentless power cuts are not only affecting how businesses operate. They are up-ending people’s lives.

John Alfonzo, 42, manages the borehole Chabwino uses in Hatcliffe. He goes to bed around 6:30 p.m. so he can be up when the electricity comes back just before 10 p.m., to begin operating the pump.

“The moment that we receive electricity back, I have to rush and open for these people so that they are able to access water,” he said.

“Because of these power outages, we have since changed our way of life.” (Additional reporting by MacDonald Dzirutwe in Harare; Editing by Alexandra Zavis and Alison Williams)

FILE: Finance Minister Mthuli Ncube gestures during a media briefing in Harare, Zimbabwe, Oct. 5, 2018.

* GDP seen shrinking as drought, forex and power crisis bite

* Hardships revive memories of economic chaos a decade ago

* After fuel price hikes, electricity tariffs rise sharply

* Empowerment law to be repealed to woo foreign investors

By MacDonald Dzirutwe

HARARE (Reuters) - Zimbabwe’s economy will shrink this year due to a drought, foreign currency shortages and severe power cuts, its finance minister said, as he announced a threefold hike in electricity tariffs that will fuel already crippling inflation.

Prices of basic goods and services have more than doubled since June, when the government renamed the RTGS currency as the Zimbabwe dollar, which has been sliding in value amid widespread shortages, including power, fuel, U.S. dollars and bread.

That has stirred memories among an increasingly impoverished population of economic chaos a decade ago, when rampant money-printing fuelled hyperinflation and forced the country to abandon its currency.

“The revised 2019 GDP growth is expected to be negative,” minister Mthuli Ncube told parliament in his mid-year budget review, without providing a figure. In November he had forecast growth of 3.1%.

He also said average domestic electricity tariffs would rise to 3 U.S. cents per kilowatt/hour from 1 cent with immediate effect as the government seeks to raise more funds for power generation.

The businesses tariff would average 5 cents while mines would pay up to 9.86 cents depending with the sector, he said.

“These are short term measures we are taking to ensure better supply of power with immediate effect,” Ncube said.

Zimbabwe has been suffering acute power shortages since May, as a result of a prolonged drought that has reduced output at its largest hydro plant and ageing coal-fired generators that keep breaking down.

Ncube also said Zimbabwe would defer publication of year-on-year inflation until February 2020 because adoption of a new currency impacted the base for calculating the consumer price index. Only monthly data would be published.

Annual inflation hit 175.66%, up from 97.85% in May.

GROWING DESPAIR

The hope and euphoria that greeted long-time leader Robert Mugabe’s departure after a coup in 2017 has gradually turned to despair as his successor as president, President Emmerson Mnangagwa, has failed to revive the economy or usher in meaningful political reforms.

The main opposition boycotted Ncube’s presentation attended by Mnangagwa, whom they do not recognise after disputed elections last year.

Workers’ incomes have been eroded by the resurgent inflation and many now struggle to buy basic goods like sugar, flour and cooking oil.

In a bid to give some relief to workers, Ncube raised the non-taxable income threshold from 350 Zimbabwe dollars ($76) to 700 Zimbabwe dollars. He said the government would import grain to feed 5.5 million people in need of food.

Foreign investors could now own majority stakes in platinum and diamond sectors, Ncube said, adding that indigenisation and empowerment law that limited foreign ownership would be repealed and replaced by new legislation.

But Zimbabwe’s economy is in meltdown, fuelling popular anger, and there are concerns of a resurgence of the violence that spilled onto the streets in January, when a sharp fuel price hike sparked protests and an army clampdown in which more than a dozen people died.

Yet, analysts say increases in the price of fuel and electricity tariffs are needed to remove subsidies and put government’s finances on a strong footing.

Ncube said the government ran a budget surplus up to June, first time in years, stopped runaway money-printing and ended offshore borrowing. It has not used a central bank overdraft under an IMF staff monitoring programme, actions that are supposed to revive the economy.

But probably the biggest driver of inflation expectations is the lack of confidence many Zimbabweans have in the country’s new currency. Before its reintroduction, it was named the RTGS dollar and had been artificially pegged to the U.S. dollar, leading to a huge discrepancy between its official and black market rate.

Many citizens also doubt their leaders can deliver the changes they seek because they are mainly the same people who propped up Mugabe for decades.

Reporting by MacDonald Dzirutwe; Writing by Olivia Kumwenda-Mtambo; Editing by Janet Lawrence/John Stonestreet/Jane Merriman

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