Independent Power Producers are gaining increased attention towards Zimbabwe's energy sector, revealing a newfound interest.
Zimbabwe's energy sector is experiencing a significant shift, with increased investment interest from both local and international companies. This transformation, according to Finance Minister Mthuli Ncube, is due to the government meeting the private sector halfway on issues that previously deterred investors.
The government's efforts to improve revenue collection from large industrial users are evident in the implementation of net metering and pre-payment programmes by ZESA, the country's primary electricity provider. However, ZESA continues to face challenges, including customer defaults on payments, particularly from these large industrial users.
To address these issues, the government has implemented several measures. For instance, the tariff has been raised to $0.16 per kilowatt hour to ensure profitability for independent power producers. Additionally, guarantees on power purchase agreements have been put in place to ensure payments if ZESA or ZETDC failed to pay.
Independent power producers in Zimbabwe have requested three key measures to facilitate investment in the energy sector. These include regulatory reforms, government incentives, efforts to improve the investment climate, and addressing the request for arrangements to access foreign currency, as outlined in the Government Implementation Agreement.
The measures implemented have attracted investor interest in solar, coal, and transmission infrastructure projects. Notable investors include Chinese companies like Sinohydro and China Energy Engineering Group, who have invested in Zimbabwe's transmission infrastructure, as well as South African firms such as Juwi and local companies, who have engaged in solar projects. Coal projects often involve state-owned enterprises and private partnerships.
The electricity issues in the country can only be resolved with the involvement of the private sector. Since the adjustment of tariffs, there has been a noticeable shift in attracting investment into the energy sector over the past couple of years. For years, the low tariffs were not attractive to investors.
However, it's important to note that while ZESA remains a crucial entity in the electricity sector, it's not recommended to rely solely on it. Most individual users are on prepaid meters and are no longer a problem for ZESA. Yet, challenges persist, and the government's ongoing initiatives aim to address these issues and foster a thriving, sustainable energy sector for Zimbabwe.
