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Zimbabwe Facing Power Outage - 2003-04-17

Zimbabwe is under threat of having its electricity imports from neighboring countries cut off for overdue payments, caused by the country's foreign currency shortage. The Zimbabwe power utility is resorting to some unorthodox measures to try to raise the money.

Zimbabwe imports more than 30 percent of its electricity from Mozambique, South Africa, and the Democratic Republic of Congo. But last month, the Mozambican and South African power companies, alarmed at the growing debt owed them by Zimbabwe, threatened to suspend supplies until payment was made.

After negotiations, the suppliers agreed to extend a deadline, but not before Mozambique drastically reduced the power it sells to Zimbabwe. Zimbabwe then reduced electricity to its customers, leading to disruption of supply to households and industry in some areas.

Since the agreement was reached, disruptions to domestic consumers have been minimal, although industrial areas and residential areas adjacent to them are still experiencing power cuts.

A Zimbabwe Electricity Supply Authority official, who spoke on condition of anonymity, said that, while there is indeed a reduction of power, industry suffers the effects because the utility is trying to persuade exporting manufacturers to pay their bills in foreign currency, so the utility can pay its suppliers.

The power official said Zimbabwe's central bank authorized the utility to bill exporting industrialists in foreign currency, on the understanding that such payments were made voluntarily and that they could also be made using the Zimbabwe dollar equivalent.

But the problem arose when industrial consumers realized that when they pay in local currency they are being asked to pay at the parallel market rate of 1600 Zimbabwean dollars to the U.S. dollar, rather than the official rate of 824 to the U.S. dollar.

Because of the power cuts, some major companies have reduced production by as much as 50 percent.

But not all companies affected are exporters. The manager of a small, Harare-based panel beating company, who also preferred to remain anonymous, said companies in his area have been going without power for at least four hours daily, including weekends, since the crisis started. He said his company has now introduced a night shift, during which time the power supply is uninterrupted.

Other companies have responded to the power cuts by closing early for Easter. The panel-beating company manager said complaints to the supply authority have been met with indifference. He also said he was told that his was one of more than 300 complaints the utility receives every day.

Zimbabwe is facing its worst economic crisis since independence 23 years ago. There are chronic shortages of basic commodities and fuel. Inflation stands at 228 percent. The unemployment rate is 80 percent and still rising. And there are fears that Zimbabwe's industry could collapse totally if its neighbors carry out their threat to discontinue electricity supplies.