Businesses in Zimbabwe are warning of severe power outages as the country struggles to repay a Chinese loan that funded a $2bn expansion of its main thermal power station.
The head of the Zimbabwe National Chamber of Commerce (ZNCC) warned newspaper Zimbabwe Independent on Friday that the country faced the “worst ever” blackouts in 44 years if Chinese lenders ever chose to “switch off” two new generating units at the Hwange power station over debt non-repayment.
ZNCC said state power company Zesa Holdings was struggling to make the required monthly repayments of $36m.
It is burdened with foreign and domestic debts of $2bn, the Independent reports, and was able to make its first Hwange repayment this October only after negotiating a substantial tariff hike.
China-Zimbabwe relations are warm, however, and there has been no public warning from Chinese parties about switching Hwange off.
Zimbabwe already suffers widespread blackouts as drought has undermined generation capacity at the 1,050MW Kariba South Hydroelectric power plant.
‘Dire’ power situation
In December 2015, the Export-Import Bank of China signed a preferential buyer’s credit agreement worth just under $1bn to build two new units, 7 and 8, at the Hwange plant.
China’s Sinohydro undertook construction and the new units were commissioned in August last year.
“We have been failing to service Hwange 7 and 8 in terms of debt repayment to the Chinese, which is an issue,” said ZNCC chief executive Christopher Mugaga.
“Even if units 7 and 8 continue firing on all cylinders, the debt position can make the Chinese to switch off until we pay. This is the reason why I say the power situation is dire.”
Mugaga warned that power shortages were already “having far and wide impacts in terms of literally all sectors of the economy”.
He called on the Zimbabwean government to fund adequate power security in the 2025 National Budget.
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