While getting food with my other this weekend I spotted some policemen patrolling the Pomona food court area and I commented how much safer I felt seeing the familiar neon green vest over khakis milling about.

“Ah! They’re useless.’ He said. ‘But their presence will scare people into behaving.”

His cynicism was well founded. He had been robbed the previous weekend. His roommate had been asleep, while the thieves pried the front door open. By the looks of the place the next day, it seemed as though they had taken their time. They took every valuable thing they could find including the kettle. I suppose they were humanist robbers, because they were decent enough to leave the radio, and return his roommates passport, which had been in the same bag as a laptop and several hundred dollars. Being an avid fan of CSI Miami, my other hoped a Zimbabwean version of Horatio would show up (sunglasses optional), to dust for prints, check for DNA and solve the crime.  He didn’t. Instead a crack team of barely interested CID officers came. They dusted for prints and filed a report as a formality, and succeeded in scaring him into considering buying a gun.

A few nights after the robbery, the police set up a road block a hundred metres away from my other’s flat. He stopped to jokingly shout at them for being too late to stop the robbery at his place. They laughed, but in the conversation he had with them, they complained about a lack of respect from the public. People did not want to stop at roadblocks.

Telling me about it later he remarked, ‘It’s their own fault; they should stop asking for bribes and just do their jobs. At least the roadblock will scare the robbers from coming back for some time, so we can make the house more secure.’

Got any power? Got any water? Got any explanations that make sense? Maybe this one does. The statement below is from the Chairman of the Zimbabwe Power Company.

Chairman’s Statement

Zimbabwe Power Company 2nd October 2011 (10pm)

Starting with the end in Mind

It is important that customers are regularly informed of the stark reality of generation capacity in Zimbabwe. If the facts are understood then it is up to each individual to assess how best they can cope going forward into the next four to five years. There has been no meaningful investment in additional power since the 1980′s – 25years! Over the past two and a half decades there has been major growth in our population as well as a population drift to the urban areas.

The demand for power is around 1,800 MW at daily peak and this is growing. Local installed operational capacity today is around 1,200 MW – so we have a gap of 30%. As ZPC implement their program to stabilise and optimise the generation capacity at all its stations over the next 12 months the supply will increase to 1,500 MW – but in the meantime demand will continue to increase.
The ONLY way to close this gap is to install additional capacity and the shortest timeline to achieve this is four years. So I urge all customers and stakeholders to understand this and take whatever steps they can to mitigate against this stunted power capacity.

I suggest that an Energy Forum is established amongst major customer groups to facilitate dialogue around this critical aspect of life in Zimbabwe. We need to seek solutions that will help address this shortage: remove duties on solar power equipment, remove duties on low energy power devices, change the building by-laws to insist that all middle and high income new houses use solar geysers, insist that new mines install solar systems in their housing and other water heating processes etc. Most importantly to engage in a national education campaign on how to be more economical in our power usage.

Other power producers need to be encouraged to enter the market. Licenses have been issued but it seems there is little appetite to invest, why? We need to debate these issues.

An Update on Capacity Expansion

Kariba and Hwange

There has been a very positive response to the “Expression of Interest” for the expansion at both Kariba and Hwange. The “Expressions of Interest” closed in mid-September and our team of Hatch, KPMG Consortium and management are reviewing the documents before making recommendations to the State Procurement Board. This will then be followed by a formal tender to prequalified companies.

To ensure that the momentum is maintained it is vital that the Independent Regulator is put in place outside of the Ministry and that this new body engenders the confidence of potential investors.

Small Thermals

WAPCOS (an Indian consultancy group in the power sector) will finish the feasibility studies to re-power the boilers at the small thermal stations. We then intend looking for funding / joint venture partners to help us carry out these upgrades.

Recent History and the Current Situation
The month of September has not been a good month for ZPC and hence for you, the customer. Many of us over the last week have experienced up to five consecutive days of load shedding from 5am to 10pm. Why?

Before I continue, it is important to note that ZETDC (Zimbabwe Electricity Transmission and Distribution Company) hold the balancing of supply and demand / (load shedding) responsibility. They have a load shedding plan which is in turn based on their expectation of power supply from ZPC as well regional power utilities. ZETDC are forced to deviate from this plan when there is a sudden loss of power from their suppliers – power generation outages at times occur without warning and this throws out the planned load shedding regime.

In writing this statement I will endeavour to give facts, to not be defensive yet not shy away from giving news that you need to hear.

There are four main themes that run through the low generation this month and particularly over the last 10 days, namely: sluggish and below par (in my view) performance of the Original Equipment Manufacturers (OEM), underperformance of the procurement and logistic chain (both in-house and external suppliers), ongoing cash flow challenges (ZPC have only received approximately 80% payment this year for  the energy it has generated and sent out, as payment of imports are given precedence) and  finally the ongoing occurrence of regional power swings( surges) into our transmission systems where protection is insufficiently robust.

Some Detail

If detail is not what you want please skip to the next section.

Kariba Power Station

This station has been generating at full capacity for much of the last two years except for planned shut downs. In June this year a failure occurred in the generator winding of Unit 2. These are copper windings as thick as one’s arm. It can only be replaced by the OEM who had to design and outsource the replacement section. During this outage a crack was found in one of the turbine blades which only the OEM can repair. This repair work is under way and is scheduled for completion before mid-October. In my view the OEM did not, and could not be encouraged to, respond to our crisis with the urgency demanded by our unique situation or with the respect that a 30 year relationship deserves. Our MD has been in Europe this week to discuss this with the OEM.

During the week ending 25th September the protection on Units 3 and 4 tripped. Unit 4 was isolated from the transformer which it shares with Unit 3. Unit 3 was then brought back into service. After meticulous trouble shooting it was found that switch gear and control devices, which were replaced by another OEM during our maintenance shut downs earlier this year, had failed. Repairs to these devices are underway under guidance of the OEM from Europe.

So in summary Kariba has been down to four units for the last 10 days with the station expected to return to full capacity by  mid- October.

Hwange Power Station
As I have mentioned in prior statements there is a significant amount of work still required to stabilise this station not the least of which is the Ash Disposal section of the process. As money becomes available we go to tender against a prioritised schedule of replacement components – some of which have lead times of up to one year!

We have lost the four Phase One (smaller) units over the last week to 10 days. Unit 1 due to the failure of the “Boiler Feed Pump” which is new and under warranty, Unit 2 due to a the failure of its thrust bearing, Unit 3 due to wear on its induction fans caused by the under-performing de-ashing system and Unit 4 due to the failure of its “Boiler Feed Pump”.

To exacerbate the situation the entire station was taken out by a surge out of Eskom (S.A) on Tuesday 27th September.

At time of writing this statement we now have two Phase Two (larger) units and one Phase One(smaller) unit feeding the grid. We expect to bring another unit back overnight (Sunday) and the fifth by Wednesday this week.

Small Thermal Stations

These stations are situated in Bulawayo, Harare and Munyati. Our major constraint in maintaining modest outputs from these stations continues to be the availability of coal from our three suppliers. All three suppliers assure us that their production will improve over the next two months. Should this not be the case we will have to consolidate and probably run only two of the three stations.
In the middle of this week NRZ went on strike. I must commend our management team and coal suppliers for their rapid response to this event. They mobilised over 40 trucks to haul the coal that was to move by rail.

The next 12 months
Major retrofitting and component replacement projects will continue over the next 12 months. WAPCOS (the Indian company that provides expert advice at Hwange) have provided an experienced project manager to help oversee these projects at Hwange. To execute these projects there will be extended planned outages of units on a sequential basis during the year ahead. For example the precipitators (ash handling) on Phase Two will be retrofitted over the next seven months therefore from the middle of October until May 2012 and one of the Phase two Units will be offline.

At Kariba the system that governs the turbine blades, in sympathy to the power demand, will be replaced on each unit (six weeks per unit) on a sequential schedule. This means that from mid-December until September 2012 only five of the six units will be online.

In addition, over the next 12 months, other units will need to be taken off line for shorter periods to undertake unit specific upgrades or repairs. There will also be the exogenous breakdowns.

So in summary the power supply regime will for the next 12 months will be much the same as it has been for the last 12 months – all in a bid to stabilise and optimise supplies in the medium term.

The refurbishment of the 40km pipeline from the Zambezi to the Hwange station remains a priority and is a one year project. The feasibility study was completed over two months ago and we await the outcome of possible of government-to-government funding with the government of India.

The Tariff

I wish to thank all stakeholders for their understanding on the need for a revised tariff after two and a half years of stagnation. The power woes of today are largely attributable to many years of suppressed earnings by this power utility. To have continued this trend would surely have led us into total darkness.

Sadly this increase in tariff as of 1st October will not translate into immediate improvements in the availability of power. Lead times for retrofitting projects can be many months.

Of equal importance is the positive message that this sends to investors: “Zimbabweans are prepared to pay for their power.”  I urge all of you to take personal responsibility for your power usage. There seems to be a misapprehension that load shedding automatically results in a dramatic reduction in your power usage and hence cost. This will not be the case if you do not manage your consumption. While you sleep the power comes back on and heats geysers, runs fridges and pumps etc.

Board
The board of ZPC remains committed to its responsibilities for the company whose performance is critical to the economy of this country. We see our role as more than one of oversight and governance. We therefore spend time in mentorship roles as well as bringing our diverse skill-sets and experience to bear at an operational level when the situation demands. Arriving at solutions to the complex challenges that have been imposed on the company over the years (lack of investment in new capacity, foregone maintenance of existing infrastructure etc.) requires a team effort.

We have commissioned the “Institute of Directors Zimbabwe” to undertake a performance review of the ZPC board.

In Closing

I hope reading this statement improves your understanding of recent events and the challenges that all of us will face in the medium term – until additional generation capacity is installed.

It is essential that we find ways to hold dialogue across all walks of life on this key economic driver and household resource.

R. Maasdorp
Chairman ZPC

The Minister of Finance, Tendai Biti, held a press conference this week announcing the dates for public consultative meetings to be held around the country by his ministry. Presentations and comments from these will inform the rationale in formulating the 2012 budget strategy.

He announced that the Ministry of Finance and Economic Planning would be using a different fiscal position for the 2012 budget. Factors informing his ministry’s decision to implement a different strategy included the 2010 Global economic crisis which was entering a second round this year and the need for a budget which better served the needs of the Zimbabwe people.

During his address the minister stated that only 33% of government expenditure went towards meeting the needs of the Zimbabwean people. The remaining 67% was consumed in providing wages for the civil service, which currently numbers at 235 000 people.

The minister lamented the lack of a common vision for Zimbabwe among politicians in the inclusive government. ‘There is a Kwashiorkor of common vision,’ he said. Other issues he mentioned were the slow pace of reforms, and the slow pace of implementation of resolutions made by even the smallest governmental unit.

The 2012 budget will focus on the following:
Job creation
Macro-economic growth and stability
Maintaining inflation levels and interest rates
A planned special emphasis on the education sector

The ministry will hold public consultative meetings with all relevant stakeholders including specialised bodies and organisations from all sectors of the economy, including retailers, bankers and government and donor entities. The meetings have intentionally been scheduled to begin in Southwest Zimbabwe, a region which, historically, has been neglected by the fiscal authority.

The 2012 Budget Strategy paper will be unveiled in parliament on Tuesday 4 October.

I don’t know about you but I’m beginning to feel like 18 hour powercuts are the new normal. There was a ZESA fault at home last week – and it took  a full day for anyone on our street to report it; we’d gotten used to the lights going off and never coming back.

The Zimbabwe Power Company chairperson is blaming low levels of generation – 4 of 6 units working at Kariba and the 2 Phase Two (larger) units are on line at Hwange. He says they hope to bring back two of the 4 Phase One (smaller) units over the next day or so. Maybe things are gonna get brighter?

But why does my ZESA bill never go down – even when the lights go out?

Teachers Unions and the Minister of Education are now at loggerheads over the scrapping of incentives for teachers in Zimbabwe. Back in the Zim dollar era when the economy took a nosedive and a massive exodus of qualified teachers was recorded, most parents were comfortable to chip in and help resolve the brain drain crisis in the teaching fraternity in Zimbabwe. This system of giving incentives was a noble idea meant to cushion teachers from the hyper-inflationary environment the country was facing during that time thus trying to avoid strikes, which would affect children’s learning.

Even though the government introduced a multi-currency system and inflation rate is now in single digits, parents continue to pay incentives to teachers because their salaries are still way below the poverty datum line. The issue of poor salaries is not only affecting teachers but also the rest of civil servants and even those in the private sector not to mention the self employed.  Some parents with school going children are even earning salaries, which are below those earned by teachers. Yet they still, while trying to make ends meet, continue to pay the incentives. The School Development Associations are at the forefront of forcing and ensuring that parents pay the incentives. It boils down to choosing to pay the incentives or risk having your child denied the right to education.

When the government recently announced that they want to do away with incentives there was an up-roar from the teachers union. Just like any other civil servants, teachers should be demanding better salaries from the government rather than continuing to squeeze money from parents from the little that they have. It’s now difficult to remove the incentives because if one compares the incentives to the salaries one would end up thinking that the incentives should be the salaries.

The teacher incentives have affected so many children because only those from well-up families can afford to access education, denying the same opportunity for children from poor families. Teachers’ representatives last week threatened industrial action if the Minister of Education went ahead with plans to scrap “teachers incentives”. The timing of the industrial action coincides with the writing of Grade Seven, Ordinary Level, and Advanced level end of year exams.

Education is a fundamental human right and essential for the exercise of all other human rights yet it’s now a privilege for the few and a bargaining tool for salary negotiations. It is high time the government and teachers stop criminalising the education system and stop this “incentive scam” which is simply extortion.

According to NewsDay, the Reserve Bank of Zimbabwe has reversed its recent directive which had dramatically restricted the activities of property sellers:

In a major climbdown the Reserve Bank of Zimbabwe (RBZ) has indefinitely suspended the implementation of recently introduced policy measures requiring proceeds from disposal of immovable property valued at $50 000 or more to be paid in tranches.

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