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South African power utility, Eskom, has revised its payment terms for power exported to Zimbabwean power company, ZESA.

Towards the end of 2016, Eskom demanded advanced payments from ZESA after battling to recoup payment from the neighbouring country, the Herald Business reported.

In October last year, Eskom threatened to cut power supplies due to a $12 million debt, of which the Zimbabwean government released a $35 million guarantee for continuous supply.

The power company imports 50MW during peak periods of demand and up to 300MW during off peak periods.

It is reported that as per the previous agreement, ZESA was paying upfront an average of $6,5 million per month to Eskom and broke the monthly bill into weekly installments due to cash constraints.

According to Herald Business, the power utility has been making weekly payments around $1,7 million whenever it has the finances to prepay for the imports.

Eskom amends conditions

According to media, the secretary for energy, Patson Mbiriri, stated that Eskom “is not insisting on its pound of flesh” regarding advance payment.

“To the extent that foreign currency is available, we are importing on the basis of prepayment arrangement, but Eskom has not been insisting on its pound of flesh. South Africa is not insisting (upfront payment) on it at every turn,” Mbiriri said.

Power imports pressures industry

It is reported that Zimbabwe requires an average of 1,400MW against local generation of 1,000MW.

Media also reported that ZESA recently asked industry to pay for power in advance to enable it to mobilise resources it required to clear arrears for power imports.

The Herald Business reported that ZESA has promised uninterrupted power supply to industry, outside of emergencies beyond its control.

Driving investment

Meanwhile, Exim Bank of China has recently committed a $1 billion loan facility, which will enable work to begin on the Hwange Power Project.

The Hwange Thermal Power Station expansion project is expected to add 600MW to the national grid from newly added units, seven and eight.

Source: ESI Africa

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