My questions came from reading an article on the Chronicle website
In this post as I try to understand the logic behind a decision by the Minister of Energy and Power Development in the Zimbabwean government, Mr Samuel Undenge. The minister this week had electricity that was being channeled towards Sable Chemicals rerouted to residential areas at the cost of a Sable shutdown and 500 jobs lost.
As Zimbabweans we are aware of how difficult the Zimbabwean electricity situation has gotten as result of power plants that are incapable of running at full capacity and recently, the low levels of water in the Kariba Dam. While residential electricity is a necessity in itself, the question of making it available at the expense of 500 jobs is questionable. The economic implications of such a move can be tremendous. The workers themselves will be distraught. it is the worst time to be out of a job.
The increase in electricity tariffs by ZETDC this year had also put a strain on Sable Chemicals in terms of the cost of powering their plant. With a debt to the power company of over $150 milion, the situation was always going to be hard. Important as they may be, residential areas with their prepaid metres are probably more likely to be financially viable for ZETDC than Sable Chemicals which is already in quicksand debt. Residential areas, if they have power will prepay for their usage, thus keeping ZETDC liquid.
Also because, according to The Chronicle, Sable Chemicals is Zimbabwe’s sole manufacturer of Ammonium Nitrate[AN], what are the economic implications in terms of our local supply of [AN]? Do we now solely depend on imports for [AN] when we have a perfectly functioning plant? There are already so many questions as to products that Zimbabwe imports even though we have the capacity to make these ourselves. It is already bad enough that Sable Chemical’s current production was not enough to satisfy the market and we were depending on importing to augment. Now we will certainly need to import and situations like this will keep increasing our dependency on imports and our balance of payments will continue to be in deficit! This will not help us make any economic progress.
A lot of things make this decision questionable. Yes, we may be expecting a drought but the months of October and November are usually the cropping months and these are actually the months when companies like Zimbabwe Fertilizer Company (ZFC) increase their workforce because the farmers are about to start coming in throngs for necessary inputs for the coming farming season. [AN] is a vital part of that farming season as the fertilizer is vital for the farmers who wish to plant maize (which is most of the farmers).
Maybe the people to question also are Sable Chemicals. They [Sable Chemicals] are reported to have closed down their plant because they currently do not have a source of Power. So while the Decision to Close may be worrying for some, maybe we should also look at Sable Chemicals and ask why they had no contingency plan, what Business continuity plan was there for cases where there could be no electricity availed to them by ZESA? Did they even plan for that? Was it financially possible or feasible for Sable to have such a Business Continuity plan? If not then how long will they be closed?
The answer that Sable has to the power is Coal Bed Methane which would be an alternative source of power. The project to have the power at the Kwekwe plant apparently requires $600million. I don’t see that much money lying around. So the question of when Sable Chemicals will open looms over ours and the 500 jobs lost. I’m going to be watching this case to see how it ends.