Drastic coal shortages despite massive natural deposits have had a ripple effect throughout Zimbabwe’s economy and ruined a deal to renovate the country’s biggest steelworks, the government has acknowledged.
The energy crisis adds to the economic woes of Zimbabwe, which is already suffering from acute shortages of fuel and many basic commodities.
Industry Minister Obert Mpofu told a panel of lawmakers in Harare on Wednesday that Indian steelmaker Global Steel Holdings had pulled out of an investment deal at the Zicosteel steelworks in central Zimbabwe because of concerns about lack of coal supplies.
The steel maker needed 60 000 tonnes of coal a month but earlier this year received just 14 000 tonnes monthly — ”enough to keep the furnaces on, but without production”, Mpofu told a parliamentary inquiry on Wednesday.
Zicosteel was once prosperous but has declined because of mismanagement and corruption and is now on the verge of collapse. In its latest company report available on Friday, main coal producer Hwange Colliery said coal mining declined from 1,4-million tonnes last year to 883 000 tonnes so far this year. It blamed shortages of equipment and spare parts, breakdowns of existing machinery and what it called ”cash-flow challenges” in buying new materials.
Zimbabwe has estimated reserves of 30 000-million tonnes of coal, enough to last the nation 6 000 years at self-sufficient 1995 consumption levels of 5-million tonnes a year, according to geological studies. The deposits are the biggest in quality coal in Southern Africa.
Daily power failures in homes and industries have been worsened by the closure of coal-fired generators across the country. Zimbabwe imports 40% of its power from its neighbours.
The broke state railroad company, also suffering breakdowns and shortages of replacement equipment, failed to deliver local coal to industry and business, with even brewers in Harare saying they were forced to import coal by road from neighbouring South Africa at three times the cost in scarce hard currency to keep their boilers fired up.
Lager beer prices rose by nearly 50% this week, the latest in almost monthly hikes this year that turned many impoverished Zimbabweans to traditional home brews.
Zimbabwe’s National Breweries reported last month they installed new gasoline-fuelled power generators to maintain production but noted growing consumer resistance to rising prices that ranked Zimbabweans the lowest per capita lager consumers against their regional neighbours. Zimbabwe drank five times less lager than South Africa, three times less than Namibia and about half Botswana’s
consumption.
Zimbabwe is suffering record inflation of 1 204%, the highest in the world, in its worst economic crisis since independence in 1980. The crisis has been blamed on land seizures, mismanagement and corruption.
Bread disappeared from most shelves this week after the government ordered bakers to slash their prices. At least six senior executives of food and food-related companies were arrested for allegedly overcharging on their products.
A Harare magistrate criticised arresting officers for being ”overzealous” and business leaders condemned the arrests as harassment of key players working to find solutions ”to our persistent and very serious economic problems”.
”Businesses are already operating under extremely difficult conditions … We expect the authorities to fully respect and protect legal rights to conduct business without fear of intimidation,” said the country’s seven main independent business associations in a joint statement on Friday.
Bakers argued soaring prices of ingredients, packaging and coal, gasoline and wheat shortages forced them to increase prices to stay in business. The Bakers Association said members had imported South African wheat for more than double the local price in efforts to keep some production lines rolling.
Managers at one Harare bakery said a cycle of 19 round-the-clock daily bakes was routinely disrupted, spoiling dough already in the ovens, by power outages affected by the closure of a nearby state-owned coal-fired power facility. – Sapa-AP