Ministerial Statement by Energy Minister Elton Mangoma to the House of Assembly on measures being taken by the government to ease the country’s power crisis. Delivered on Thursday, July 12, 2012:
Mr Speaker Sir, I have found it necessary to brief this House of elected representatives on what we are doing in the Ministry to ease power outages in the country.
Zimbabweans across the country and in all spheres; from housewives to business people, have a sad story to tell about the power cuts they experience every day in their homes and in the factories.
Mr Speaker Sir, it is the duty of government to explain the measures we are taking to alleviate the plight of the people. The solution might not come tomorrow, but the people of Zimbabwe deserve to know that we are working flat out to mitigate the situation which deteriorated way back due to non-investment in this critical sector. There was no way we could resolve in three years a decay process that began decades ago.
Nevertheless, I rise to make public our efforts in redressing this national challenge.
It is a challenge that has affected a cross section of people from the big corporates in Harare and Bulawayo to clinics and health centres in Chendambuya and Gokwe; from schools in Filabusi to the ordinary power consumers in Budiriro and Pumula.
Mr Speaker Sir, it is no laughing matter; but they say the most popular words in Zimbabwe are “Magetsi auya”. As government and as a Ministry, we are aware of the mammoth task before us and we want to assure you that we will discharge of our national duty to the best of our ability.
The power supply in the country is inadequate leading to massive load shedding in all the sectors. This is on the backdrop of:
# No new generation capacity having been created in the country since 1984.
# A serious shortage of capacity in the region because of increased demand in their countries coupled with no new investment.
# Lack of maintenance, particularly from 1998 to 2009 leading to serious degeneration of both Generation and Transmission and Distribution infrastructure.
# Low and unviable tariff over the past decade (some correction made in 2011).
# Low funding from Treasury and high level of debtors.
# The economic revival has put pressure on the demand for electricity and particularly on domestic consumers, who had absorbed the electricity that was available from Industry and Mining.
MEASURES BEING TAKEN
The measures being taken are divided into Generation capacity and supply side activities, Demand Side Management and Institutional changes. All these will work towards alleviating load shedding and increasing the power for enhanced economic activities. The supply side is further split into short, medium and long term measures.
GENERATION CAPACITY AND SUPPLY SIDE ACTIVITIES
Short term (900MW)
Optimisation of Hwange Power Station (250MW)
Mr Speaker Sir, Hwange Power Station has an installed capacity of 950MW. It however has been producing between 300 to 500 MW. This is a result of poor maintenance, and lack of alignment of the production facility.
For example, the stage two turbines (generations) have a capacity to generate 220MW each, but the boilers are such that you can generate around 150MW. Improving the boilers can increase the capacity to 200MW each. Work to identify what needs to be done is underway.
Poor maintenance management is exemplified by the current saga on units one and two where we had the rotors down and management concentrated on getting them fixed without attending to ancillary equipment at the same time. Now the rotors have been repaired, but work on the stator only commenced last month. Measures are being put in place to avoid such sloppiness including skills enhancement and greater team work.
Repowering Small Thermals (120MW)
All the small thermals can produce, with constant coal supply 200MW, compared to the current 60-80MW. Short term coal supplies can be increased by more cooperation and minimal investment at Hwange Colliery Company (HCC), so that they produce the required type of coal.
Immediate steps are being taken to modify the boilers, so that they can use the same thermal coal as Hwange Power Station. This is an 18-month programme. ESSAR will lease Munyati Power Station and they have indicated that they can make it produce 140MW.
Gairezi Hydro (30MW)
ZPC has applied for a licence to construct the Gairezi hydro scheme. This is estimated to cost $90 million and the project will take 18-24 months. The licence will be issued this month and finances are being arranged. It will be necessary to work with OPC to avoid the delays of the State Procurement Board (SPB).
Lupane Coal Bed Methane (500MW)
Mr Speaker Sir, there is need to map and determine what resource there is in Lupane. This is then followed with the construction of a gas fired plant in Lupane. The first phase involves the drilling of exploratory wells. As soon as these wells are drilled, instead of closing the wells or flaring the gas, the gas will be directed to a series of machines that generate between 5-10MW. These machines will be hired from Agreko. It becomes possible to generate electricity almost immediately after the wells are drilled.
After mapping and determination, a mining plan is then determined. The mining plan is then executed taking into consideration the level of resource and what it will be used for. The current proposed uses are electricity generation and fertilizer production.
Mining can start immediately after resource mapping with the gas from the mining wells also being directed to more hired machines. This term is called Temporary Generation. These will only be removed after the commissioning of the Permanent Plant.
There are three parties already interested in the resource mapping and determination phase, who will do it on behalf of ZPC. Funding has already been secured for this phase.
Solar Into Grid (100MW)
The main thing that makes solar technology more expensive is the need to produce and store during the day for use at night, when you cannot produce. The current situation is that electricity is short during the day so there is no need to produce and store. Generating without storing will bring the tariff to between 10c-12ckwh, which is within the current tariff structure.
Solar plants can be put up very quickly. Current discussions are centering on:
# Should this be one plant or a number of them.
# Signing of Power Purchase Agreement (PPA) to buy all the power produced for a fixed period (consideration between 5-10 years).
The main issue is acceptability of Zimbabwe Electricity Transmission and Distribution Company as a party to the PPA.
Solar Panels on Homes
Mr Speaker Sir, we have currently agreed with a housing cooperative in Mutare that they put solar panels as part of their roofs. The electricity so generated will be used within their homes and the surplus fed into the grid. At night the homes will then be supplied by ZESA. At the end of the month, the account will then be settled depending on the power produced and consumed. The flow of electricity will be measured using a Reverse Meter.
This policy can be extended to anyone although it may be more applicable to new housing complexes as the panels will be part of the cost of the roof, and therefore no extra investment required.
There is a programme under Rural Electrification Agency (REA) to produce solar lamps locally targeted to retail at $10 or less. REA is working with local industry to make sure there is significant value addition in this project. It will then lead to localisation of technology and job creation. Designs are at an advanced stage.
Treasury has provided $1,5m to this project, which will enable particularly school children to buy these lamps in instalments. The lamps are earmarked for rural schools. The involvement of industry means that a lot more solar lamps can be produced for commercial purposes to be made available to the generality of the public. These solar lamps are a good source of lighting when the electricity goes out.
Mr Speaker Sir, Zimbabwe used to import as much as 500MW firm power from SNEL, EDM, HCB and ZESCO. At the moment the only firm power is 100MW from HCB. The demand for electricity within the region has been growing, to a point now where whatever can be produced is utilised. The likely immediate source of imports is EDC and HCB. Negotiations are underway.
Botswana is likely to commission a power plant soon. EDM is being persuaded to export to us the power (50MW) they are currently exporting to Botswana.
Zambia is likely to commission Kariba North expansion next year and dialogue is taking place now.
Mozambique is planning to do Temporary Generation at their Southern Gas fields and this will add additional generation. We have registered our interest. Payments done to reduce our debt make us worth considering.
DEMAND SIDE MANAGEMENT
The tender board awarded tenders to:
# Solahart Zimbabwe (Pvt) Ltd (Zim)
# Nyamezela Consulting Engineers cc (RSA)
# ZTE Corporation (China)
# Finmark Marketing (Pvt) Ltd (Zim)
These tenders exclude Harare and Bulawayo, which are the two places with the greatest need. The tenders are for supply and fix. Contracts signed are to ensure that those who quickly install their meters are allowed to install additional ones so as to roll out as quickly as possible and not be held by laggards purely on the basis that they won a tender. It is proposed to use the same tender winners on the same performance basis for Harare and Bulawayo.
The roll out is expected to start next month (June 2012) and be completed within 10 months. The current prepaid meter platform is being upgraded to handle different types and increased number of meters.
Prepaid Meter Platform Tender
Mr Speaker Sir, a tender was floated, adjudicated and awarded to REVMA. The adjudication process was fraudulent. All other tenderers who proposed external hosting were disqualified as it was a specific requirement that the platform be based at ZETDC. The adjudicators knew but presented REVMA as a direct supplier until the contract signing stage when REVMA wanted to be paid 60 cents per transaction.
Discussions with State Procurement Board (SPB) indicated that REVMA had not misrepresented their position, but that the adjudicators had falsely misrepresented the facts. As a result SPB could not reverse their award. The only recourse is for ZETDC to approach the Administrative Court for the nullification. ZETDC has now been directed to approach the court. Any award must now be based on those who show on the ground that they have a system that works.
Compact Florescent Lamps (CFLs)
The contract for the supply of CFLs has finally been signed (21/05/12). It is hoped that the first batch of one million lamps will be delivered on 30 June 2012. Installation of the lamps will commence around mid-July.
The installation of the 5,5 million lamps, estimated to be completed by October 2012, will save evening peak electricity equivalent to 180MW.
Mr Speaker Sir, biogas is a sustainable, environmentally friendly source of energy. It is mostly used for heating and cooking purposes, and thereby releasing electricity for other purposes. A Zambian expert has been engaged for the purposes of technology transfer through the construction of prototype digesters. Three sites that have been identified are:
# Mbare Musika – Vegetable market
# Harare Hospital
# Roosevelt Girls High School
There is need to identify two other users covering:
# Farm environment
# Domestic dwelling
The work on all these prototypes is expected to commence in June.
Local constructors are expected to gain knowledge and insight into the construction for future propagation. Treasury budgeted $1,5 million for this purpose. The funds are sufficient to cover other educational and health institutions in all the provinces. REA is the implementation agent.
The residue after the gas has been used is very good organic fertilizer. Local industry is being involved in the manufacture/adaptation of gas stoves. The cooking system at Harare Hospital will be completely revamped.
Hwange and Kariba Expansion Projects (900 MW)
Hwange (600MW) and Kariba (300MW) expansion projects are currently being tendered for. The tenders are due to close on June 5, 2012. (Been advised SPB moved closing date to July 3, 2012). There are now four (4) tenderers for each project. The main issues to be considered are:
# The availability of funding to carryout projects. An alternative plan to fund Kariba South expansion has reached an advance stage.
# The technology to be used to create the cavity at Kariba – the type of blasting/drilling – due to the weak rock formation.
# The Ministry of Finance had written advising abandoning the tender process at Kariba in favour of Sino hydro, following the agreement they signed with China. It is recommended to carry through with the tender as scrapping it now could cause legal complications and further delay the project.
The projects are expected to take around 48 months.
Hwange-Western Areas (1000MW)
Mr Speaker Sir, this is a new project that will result in the construction of a coal fired power station in the Western Areas Coal fields. The Western areas coal fields concession was granted to ZPC by Cabinet in July 2010 for the purposes of attracting investors into power generation.
Promising negotiations are underway with China Railways International (CRI). The main issues are:
# That the power plant will belong to ZPC 100%
# That a mining venture is formed between ZPC and CRI
# CRI will operate the power plant for the benefit of ZPC until the loan has been repaid
It is estimated that the power plant will take around 3-4 years to construct, after a 6-12 month period of surveying and designing.
Independent Power Producers (IPPs)
A number of IPPs have been licensed. The three big projects are Sengwa (2400MW) Lusulu(2000MW) and ESSAR (600MW).
Bindura Gas Plant (2200MW)
Mozambique has discovered vast natural gas quantities in the Rovuma Basin. We have expressed our interest to have access to the natural gas.
The idea is to pipe the gas from Rovuma Basin, through the bridge at Tete to Bindura. A gas fired power station is then constructed in Bindura and feed into the Bindura-Songo transmission lines (This is similar to what Ghana has done with the Nigerian Gas).
The gas pipeline then extends to Harare, where it will be piped to the residential areas for cooking purposes, (like in most of the developed countries). This whole plan can be replaced by the Lupane CBM depending on the quantum of the resource.
Mr Speaker Sir, Zambia and Zimbabwe agreed on February 10, 2012, to embark on the Batoka hydro project with a total capacity of 1600-2000MW. It was agreed to proceed on a BOT basis under the leadership of the Zambezi River Authority (ZRA). Zimbabwe agreed to pay Zambia $70.8million for the CAPCO assets. $10m has since been paid. Interest has been agreed at $114 million and there is no repayment plan. Zimbabwe has already asked Zambia for interest not to be paid.
A detailed geological survey was done in 1994. It may be necessary to carry out some confirmatory geological survey, together with an Environmental Impact Assessment.
It is envisaged that the ZRA in consultation with the two countries will finalise the BOT framework soon so that they call for interested parties to put forward their proposals. The main issues to be considered are the legal and commercial issues and leave room for the interested parties to compete on issues like design and technology.
The Great Inga
The Great Inga hydro project is proposed on the Congo River in the DRC. This can produce upwards of 40,000MW. This project is too big for the DRC and requires a regional approach. If this is constructed it will change the economic fortunes of the region. It requires strong leadership and project design skills to make all the political leaders comfortable with the project. Hydro power is cheap and it is worth the time spent on promoting it.
OTHER INSTITUTIONAL ISSUES
Mr Speaker Sir, the funding of ZESA by Treasury has been minimal, despite the provisions that have been made in the budget. A verbal agreement has been reached with the Minister of Finance to deduct the subsidy to Sable Chemicals and Government’s indebtedness to ZESA against the funds paid by Treasury.
The Zimfund promised some $30m as urgent intervention. This money was paid in by the Donor countries almost a year ago. No disbursements have been made yet.
Restructuring of ZESA
Mr Speaker Sir, it is proposed to restructure ZESA to make it more efficient and responsive to the consumers, whilst at the same time, setting up a mechanism, which will make it easy for Independent Power Producers have a level playing field.
ZESA Holdings was supposed to be only an instrument of holding shares in the successor companies. Instead it morphed into a huge bureaucracy negating the very point of establishing successor companies. In 2002 the Transmission business was legislated to be separate from distribution, only to be reversed later.
It is proposed that:
# ZESA Holdings be collapsed into a National Grid Services Company (NGSC) and move all the legacy debts to this company. It will be 100% Government owned and it will not be privatised. NGSC will be responsible for Transmission, Market and Systems Operation. It will have the “reserve supply” responsibility.
# ZETDC will transform to Zimbabwe Distribution Company (ZDC) and be responsible for Distribution of Electricity.
# Each of the companies will have a separate Board which will report directly to the shareholder.
These companies will be:
# Zimbabwe Power Company (ZPC)
# Zimbabwe Distribution Company (ZDC)
# National Grid Services Company (NGSC)
# ZESA Enterprises (Pvt) Ltd (ZENT)
Establishing an Electricity Industry
Almost 90% of all the spares and services to ZESA are from outside our borders. There is no doubt that the engineering capacity at Independence was so high and yet we are not reviving it. Local content of Hwange Power Station was over 50%.
ZESA has been a major consumer and the spending power it has can be used as a catalyst for the revival of the local electricity industry. On top of this, our own engineers have excelled in the region and beyond.
Mr Speaker Sir, this requires deliberate targeting and formation of partnerships. ZENT has been improving its manufacturing capacity, for example, they now can produce 500 transformers per month. We can therefore not allow transformers from outside at the expense of knocking out this capacity.
In the same vein, ZPC organised a workshop with the local industry so that they can hold each other’s hands as they build the industry together. This requires flexibility in the rules of the SPB.
The projects listed under IPP indicate that even if a quarter of them are realised, it is a lot of work. This is the time to ensure that the capacity is here to tap and localise the investment resource whilst at the same time creating the much needed jobs.
Creating local capacity will also reduce the time it takes to carryout repairs. For instance, generator 3 at Harare Power Station has been out for more than a year, with the rotor alignment waiting for its turn in South Africa. We need to empower our people by making them partners in the supply of services and spares.
POLICY DOCUMENT LAUNCH
In early 2010, Cabinet approved the Energy Policy document. Over this period series of workshops have been held with stakeholders in order to refine the policy and prepare for implementation. The product of those consultations has been completed, thanks to the assistance by UNDP.
It is planned to launch the document in July.
Mr Speaker Sir, I wish to assure the House that we are aware of the plight facing the people of Zimbabwe. We share with them the grief and misery of not having a reliable power supply.
I pledge to be making these ministerial statements to update the public on the progress in instituting these measures. We owe it to the people of Zimbabwe.
I Thank You!