Home » Business » Sable Buckles Under U.S $123 Million Power Bill

FERTILISER manufacturer Sable Chemicals has accumulated a $123 million bill from the Zimbabwe Electricity Transmission and Distribution Company for unpaid electricity.

The bill constitutes about 10 percent of the total amount consumers owe the power transmission and distribution company, which is now estimated at over $900 million.

Sable Chemicals, based in the Midlands Province town of Kwekwe, consumes huge amounts of electricity, currently translating to average daily consumption of 80 megawatts. Most of the electricity is required to power the firm’s electrolysis plant.

Zimbabwe is only able to generate an average of 1 300MW with 2 200MW required at peak of demand.

Sable’s power bill has continued to grow exponentially since 2009, despite the company enjoying power supplies at a grossly subsidised rate due to Sable’s strategic importance.

The company is Zimbabwe’s sole producer of ammonium nitrate fertiliser.

Sable Chemicals has since dollarisation been getting power supply at 3 cents per kilowatt hour. ZETDC procures the electricity from the Zimbabwe Power Company – power utility Zesa Holdings’ generation unit – at 8 cents per kilowatt hour.

Sources said the company recently had its power supply disconnected over the arrears, but was reconnected to the grid following the intervention of Energy and Power Development Minister Dzikamai Mavhaire, allegedly at the directive of Cabinet.

Sources said Cabinet felt that cutting supplies to Sable Chemicals could affect availability of key agricultural inputs such as ammonium nitrate for the 2014-15 farming season.

Sable Chemicals electrolysis plant is used for the separation of water into oxygen and hydrogen. Hydrogen is a key input in the manufacture of ammonia, an important raw material used by Sable Chemical in the production of nitrogenous fertilizers.

The firm, operating at 40 percent capacity, is importing 30 percent of the ammonia required for nitrogenous fertilizer, with the balance produced at the Kwekwe plant.

“They want to continue getting the power at 3 centskWh when ZETDC buys the electricity at 8 centskWh that is not sustainable. ZETDC ends up punishing customers through load shedding to supply a company that is not paying,” a source said.

The source said this affected resource mobilization to maintain the network and settle debts, because unlike the bills accrued by domestic consumers, there was no mechanism to defray part of the debt from periodic prepaid payments for electricity.

Contacted for comment Sable Chemical chief executive Mr Jack Murehwa said “governance dictates that we do not discuss our creditor, debtor situations in the press.”

He said it was “untrue” (that Sable Chemical owed $123 million for unpaid electricity) and also dismissed reports that the firm once had power supply disconnected.

“We were on reduced power for some period in November while discussions were going on between Government, Sable and ZESA on standing power supply arrangements.

Asked what plans were in place to settle of the massive bill, Mr Murehwa said “I am not sure what information you have on the $123 million, but you certainly seem misinformed,” saying governance dictated that such issues must stay clear of the press.

“However, if some of my creditors or debtors choose to discuss such information with you, that is them and I cannot be part of that discourse,” Mr Murehwa said.

Efforts to get official comment from Zesa Holdings also proved fruitless yesterday.

Mr Murehwa said Sable had always receiving support from Government since being founded in 1969 and the terms were agreed the three parties, including ZESA.

Source : The Herald

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