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Zimbabwean industries are facing significant challenges due to worsening power shortages, with businesses experiencing outages of up to 18 hours a day.
This situation is primarily caused by low water levels at the Kariba Dam, which have reduced power generation, alongside frequent breakdowns at the Hwange coal thermal power station. These outages are severely impacting economic productivity across various sectors, including mining, manufacturing, and agriculture.
Economic Impact
The power outages have led to substantial financial losses for businesses. A recent survey by the Chamber of Mines indicated that miners alone have lost approximately $500 million in potential revenue due to these outages in 2024. Major mining companies, including those linked to Impala Platinum and Anglo American Platinum, have been particularly affected, losing production time and revenue.
“Power outages are one of the key constraints, with a recent survey by the Chamber of Mines indicating that miners have lost $500 million (around R8.8 billion) of potential revenue due to power outages in 2024,” said Lloyd Mlotshwa on Friday, lead analyst for IH Securities.
Despite forecasts for a promising 2024/2025 agricultural season, the ongoing power issues threaten to negate potential productivity gains. Matts Valela, chairman of African Distillers, noted that limited access to foreign currency and erratic power supply are significant challenges for economic growth. He said,
“The current limited access to foreign currency, and erratic power supply will continue to present challenges” for the wines and spirits maker.
However, Valela believes the “forecast normal agricultural season, increased activity in mining, tourism, and infrastructural development are expected to boost economic activity” in Zimbabwe.
Rising Costs and Alternative Solutions
The high cost of electricity is compounding the problem, with tariffs set at about $0.14 per kilowatt hour, and even higher during outages when businesses rely on diesel generators, which can exceed $0.30 per kilowatt hour. This situation is forcing some companies to seek costly electricity imports from regional suppliers.
To address the power shortages, Zimbabwe is encouraging the development of independent power producers and is investing in renewable energy projects. Notably, a $3.6 billion energy industrial park is under construction in Beitbridge, which includes a 1,200 MW coal-fired thermal power plant.
Apart from the power supply deficit that Zimbabwe is experiencing, IH Securities said current “high electricity tariff, pegged at about $0.14 cents per kilowatt hour and a peak tariff of about $0.19 per kilowatt hour “continues to exert cost pressures” on industry players.
“The cost is even higher during power outages, where diesel powered generators are used as a backup, with an implied tariff exceeding $0.30 per kilowatt hour,” said the securities research company last week.
Conclusion
The ongoing power shortages in Zimbabwe pose a significant threat to the country’s economic recovery and growth. While there are efforts underway to mitigate these challenges through new energy projects and independent power generation, the immediate impact on industries remains severe, highlighting the urgent need for sustainable solutions to the energy crisis.
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