COMPANIES are paying a heavy price for the rolling blackouts as businesses are spending as much as US$300 000 per month on fuel for generators, making the cost of producing goods expensive and unsustainable.
The cost of using alternative energy sources is nearly 50% higher than conventional electricity.
Business executives this week warned that the ongoing power crisis, driven by rolling blackouts implemented by Zesa, is crippling operations.
Load shedding, which now extends up to 16 hours a day, has forced businesses to rely heavily on expensive generators, further driving up production costs.
The burden of these costs is being passed on to consumers, worsening Zimbabwe’s already high cost of living.
This challenge is compounded by foreign currency shortages and the fast depreciating Zimbabwe Gold (ZiG) currency, now trading at up to 26 to the United States dollar on the parallel market.
Keep Reading
- So, is it a currency?
- Proplastics profit trebles to US$520 000
- Navigating Zim’s new monetary frontier: A profound analysis and real estate implications
- New RBZ boss talks tough
In addition to power outages, high electricity tariffs — currently estimated at 44% — are forcing some companies, particularly in the mining sector, to abandon expansion plans.
Several companies have fired warning shots of the overarching consequences of the power crisis as businesses cannot afford the high cost of fuel to cover for the long hours of load shedding.
A survey by the Zimbabwe Independent showed that some butcheries and restaurants have suffered significant financial losses due to spoiled perishable goods during power cuts.
Simbisa Brands, a major player in the fast-food sector, reported spending almost US$300 000 monthly on fuel for generators to keep their outlets operational.
Simbisa Brands managing director Warren Meares told the Independent that they were forced to adjust operating hours.
“We had to adjust because operating on a generator is over 50% more expensive than using conventional electricity. The cost of fuel versus business is incomparable. This has a major impact on our financials," he said.
“We use between US$280 000 and US$300 000 on fuel per month. It’s quite serious. But we are coming up with plans to see how we can move to gas and solar. We are running some tests to migrate to gas and solar.”
Confederation of Zimbabwe Retailers president Denford Mutashu said power cuts were strangling already struggling businesses.
“Businesses are sinking due to these numerous challenges,” he said.
According to their 2023 annual report, retail chain TM Pick n Pay used a staggering 2,04 million litres of diesel at a cost of US$3 million to power their backup generators in 2023.
“Diesel usage increased due to use of generators as a result of power outages affecting mostly the Harare branches,” the supermarket said in the report. “A power fault at the Harare Street Supermarket led to heavy reliance on generator usage in December 2022.
“Two new branches, Madokero and Simon Mazorodze have been operating on generator since trading commenced in December 2022.”
Zimbabwe National Chamber of Commerce president Tapiwa Karoro cautioned that the electricity situation was straining companies.
He said the electricity shortage was severely impacting production costs, warning that manufacturing will become increasingly expensive unless a sustainable solution was found.
“The power shortage has had a tremendous impact on business,” Karoro said. “There is going to be a huge impact on the overall cost of manufacturing as this will see an increase in the cost of production.”
He said Zimbabwe needed a proper energy strategy to boost electricity generation.
The hospitality sector is also feeling the effects.
Stan Higgins, spokesperson for the Restaurant Operators Association of Zimbabwe, said restaurants were now dependent on generators for most of their operational hours.
“The erratic supply of electricity has been a major problem and this has resulted in increased cost of operation for restaurants,” he said. “Almost all restaurateurs are now using generators daily in most of their operational hours. Generators have, therefore, become the primary power source for restaurants.”
Diesel costs US$1,63 per litre, according to the Zimbabwe Energy Regulatory Authority.
Higgins said: “A side effect of power cuts has been an increase in wastage, with chilled or frozen products being spoiled. This results in increased charges for consumers and loss of business.”
Bakers’ Association of Zimbabwe president, Elvis Ncube, said the bakery sector consumes up to 100 000 litres of fuel per month, which amounts to approximately US$163 000.
“The fact that there is no Zesa is common knowledge. With Zesa being unavailable for extended hours, we are forced to rely heavily on generators,” Ncube said.
“We are consuming roughly between 75 000 to 100 000 litres per month. It’s not easy to track daily usage precisely because generators are filled up and run for several days, so we primarily monitor our monthly consumption. Some businesses use as much as 37 000 litres, while others use less. The power crisis has certainly impacted our operations.”
NetOne group chief executive officer, Raphael Mushanawani, said the reliance on generators has increased the company’s fuel consumption by 20%.
He said most of their base stations were either powered by the national grid or generators as a backup.
“The alternative sources of power available are the diesel-powered generators, which we have at our base stations, including our data centres. We also have solar energy, but we haven’t managed to cover all base stations around the country,” Mushanawani said.
He said the ongoing power generation challenges at Hwange and Kariba have led to an increased reliance on generators, which has, in turn, driven up operational costs.
“What it just does is increase our operational costs and the ultimate result is painful as it affects our profitability. We have seen an increase of the use of fuel by 20%.”
Econet Wireless Zimbabwe media and corporate affairs executive Fungai Mandiveyi pointed to the Capex investments they have made to deal with power challenges in its operating environment.
“Despite the power deficit arising from load shedding, we state in our annual report for 2024 that we managed to maintain the supply of power to our base stations and keep the network running through a combination of Capex investments in diesel generators, solar energy and long-life battery upgrades,” Mandiveyi said.
“Our annual report specifically says: Due to extended periods of load shedding, the business invested in 150 new generators. The company now has 1 450 sites (supported by diesel) generators.”
Farmers, too, are facing difficulties, as power shortages hinder irrigation and other essential activities.
Zesa’s power generation woes are largely due to low water levels at Lake Kariba, as well as financial difficulties in meeting US$160 million in monthly loan repayments to Chinese lenders.
The loans, totalling US$1,5 billion, were used to fund the construction of units 7 and 8 at the Hwange Power Station, which came online last year.
Zesa has indicated that the high electricity tariffs are essential for repaying these loans.