Power cuts choke Cafca cables demand



ZIMBABWE Stock Exchange-listed cable manufacturer, Cafca Limited says future cable demand is unpredictable owing to the impact of prolonged power cuts in the country.

Zimbabwe has been facing acute power shortages lasting 18 hours a day as the power utility company, Zesa Holdings, cited several challenges, which include foreign currency shortages, breakdown of equipment, unpaid debt and severe reduction of water levels at Lake Kariba.

Last month, Zesa increased electricity charges from 9,86 cents (US1 cent) per kilowatt hour (kWh) to 27 cents/kWh (3 US cents), in a bid to cover the power shortage gap.

“The impact of the chronic power shortage in the country makes it difficult to predict future demand for cable,” Cafca secretary Caroline Kangara said in the group’s trading update for the third quarter ended June, 2019.

Kangara said the number of conductor tonnes sold during the period under review decreased by 7,56% from 582 tonnes recorded in the same period last year to 538 tonnes due to a drop in local demand, attributed to the implementation of monetary policies.

She added that the quantity of conductors sold also tumbled from 1 588 tonnes in 2018 to 1 384 tonnes in 2019.

Year to date exports by volume improved to 10,3% of sales from 4,8% recorded in the prior year.

Going forward, the group has increased its finished goods stock in order to cover any improvement in the market.

“Despite the downturn and to ensure all products required locally are readily available we have justified keeping the numbers employed at the same level as last year. Finished goods stocks have been increased to adequately cover any upturn in the market,” Kangara said.

The company manufactures and supplies cable and allied products used in the transmission of electricity in Zimbabwe and other countries in southern and central Africa.

Apart from manufacturing and supplying cables, the company also recovers decommissioned cables for recycling that can be exchanged for other products within the group’s manufacturing range.

Reunert Electrical Engineering Holdings Limited is the group’s major shareholder, owning 70% of the company and the remaining 30% is owned by different shareholders.