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Zambezi Gas battles to recover US$1,3m from ZPC

Business
Menard Makota

ZAMBEZI Gas and Coal Mine is pushing for Zimbabwe Power Company to pay 50% of the US$1,3 million owed by the parastatal for coal supplies, as the miner faces operational challenges.

Operations director Menard Makota said the delay in payment by ZPC was a setback to the miner, considering that it was paying 100% in local currency.

“Our biggest customer is the Zimbabwe Power Company (ZPC) whose role is to power the nation. We cannot export coal targeted for ZPC as that will increase blackouts. Unlike other minerals like gold, platinum etc, our role is to be an industry enabler. Industry needs energy for its processes. As you may be aware, power cuts in the country are at unacceptable level,” Makota said on the sidelines of a tour of the mine in Hwange organised by the Association of Mine Managers of Zimbabwe as part of its annual conference proceedings recently.

“The challenge is ZPC pays us when it wants and any amount it chooses. It owes us over US$1,3 million which is paid in Zimbabwe dollars at the interbank rate. Imagine you go to the bank to borrow such an amount at 200% interest; it doesn’t make any sense at all. Besides paying late, ZPC also pays 100% in local currency. Engagements have been underway for some time to encourage ZPC to pay 50% in foreign currency for coal.”

The miner’s major operational expenditure is on spares parts, diesel and explosives which are only available in foreign currency.

He added that several meetings with ZPC, Mines and Energy ministries have been held in a bid to resolve the challenge and the parastatal indicated that it was waiting for the Finance ministry to draft a statutory instrument to allow partial payment for coal in foreign currency.

“ZPC wrote to us in July 2020 saying it would pay 50% in forex and 50% at interbank rate, it is now over two years, and we are still talking. On the other hand, Zesa has an arrangement to import electricity wholly in foreign currency at rates much higher than what they need to equip the coal mines and buy spare parts for power stations,” he said.

Zimbabwe has been facing power challenges due to low water levels in the Kariba Dam, which has seen increased reliance on thermal power.

“You all know that with the Zimdollar you wouldn’t want to go beyond a week but as we are talking part of the money is well beyond 90 days. We cannot export more than 40% of our production as we have a national duty to power the nation,” Makota said.

“We keep engaging ZPC to improve our payments and to honour its promise to pay us 50% in foreign currency. All the other mines pay for electricity in foreign currency and we are asking for just 50%. We supplement the remainder of our forex needs with our exports which are currently between 30% and 40%.”

Currently the company exports to Poland, China, DRC, Zambia, Malawi, South Africa and Namibia, among others.

ZPC declined to comment.

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