ZIMBABWE’S biggest milk products processor, Dairibord Holdings Limited said last week it is planning to invest US$3,6 million into solar power and water facilities to address shortages.
In an interview with businessdigest, Dairibord CEO Mercy Ndoro said the Zimbabwe Stock Exchange-listed operation had not been spared by rolling blackouts.
Water and electricity shortages have crippled industrial production across Zimbabwe in the past decade.
In February, the Zimbabwe National Chamber of Commerce estimated that power shortages could cost the economy US$4 billion this year alone.
Dairibord’s first quarter report showed that some of its divisions reported increased volumes, while others saw production slowing down.
But water and power shortages had a significant bearing on the firm’s performance.
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Power cuts escalated in December, after water levels at Lake Kariba dropped to critical lows, following prolonged droughts.
Zimbabwe operates the 1 050 megawatts (MW) Kariba south hydroelectric power plant on Lake Kariba.
The power crisis was compounded by problems at the country’s major thermal power facility at Hwange, which were partly addressed when 300MW were added early this year.
“We are going to have a 1MW plant at Chipinge (where Dairibord operates a major plant),” Ndoro said in the interview after presenting the firm’s performance to analysts last week on Thursday.
“We will then move to Chitungwiza (where Dairibord also operates one of its factories) before we move to the Rekayi Tangwena factory (in Harare). “These are going to be one MW plants. All of us are experiencing power cuts all the time. We have a standby generator at each of our factories, but as we all know, the cost of running a generator is very high.
“That increases the costs of doing business. This is why we are looking at investing into solar projects to mitigate the impact of power cuts on our business,” she said.
Ndoro added that the beverages giant currently had 1,5 million-litre water reservoirs at Chitungwiza.
But the plan was to bring into operation an additional two million litres.
Following this investment, Dairibord would have 3,5 million litres storage capacity all the time at the plant.
“At each of the factories we at least have one million litres of water. The solar plant is going to be vendor financed. But it costs just under US$1 million for each 1MW plant. For water reservoirs, each one costs about US$100 000,” Ndoro said.
“We are going to bring two one-million-litre facilities at Chitungwiza, two one-million-litre facilities for Rekayi Tangwena, a one-million-litre tank for Simon Mazorodze (in Harare) and a one-million-litre tank for Chipinge.
“There is very little we can do in terms of water. We have to buy water and bring it to the factories,” she said.
Dairibord said in its first quarter report that sales volumes were 14% above the same period last year, supported by investments into building capacities.
The firm said its foods division saw volumes contract by 8%, while milk volumes grew by 7% during the review period.
Dairibord added that its beverages division grew by 20%.
Volumes sold in US dollars increased by 68% to 15,3 million litres, accounting for 58% of total sales.
This figure was 39% during the comparable period in 2022.
Ndoro said Dairibord’s foreign currency requirements would be funded through increased US dollar sales.
Most of these sales would be generated from the informal sector, which mostly sells products in US dollars.
The sector controls over 60% of Zimbabwe’s gross domestic product, according to the International Monetary Fund (IMF).
Ndoro said one of the biggest cost drivers to buying water was the transportation cost.
“What we are trying to do at all our factories is to increase storage capacities,” she said.