ZIMBABWE‘S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE erratic power supply for the surveyed farmers was approximately $2 million (Kaseke 2009). Another study found that inadequate electricity impeded the efficiency of the mining sector (box 1).

# **Box 1. Costs of inadequate electricity to the mining sector in Zimbabwe**

Zimbabwe is richly endowed with over 40 different minerals that have a high demand in international markets, and mining activities in Zimbabwe contribute around 13 percent to gross domestic product (GDP) and are the second-greatest contributors to foreign-currency earnings after agriculture. The minerals extracted include gold, coal, nickel, platinum, and diamonds. Extraction of these minerals in Zimbabwe has been plagued by persistent power cuts, which has been cited as the main obstacle to the productivity of Zimbabwe‘s mining industry. Almost 90 percent of the mines surveyed indicated that electricity was a major obstacle to mining operations. Firms indicated that frequent outages that were as much as over 12 hours plagued efficiency of mineral extraction.

Erratic power supply at mines resulted in loss of output, idle labor costs, and costs associated with restarting the mining operations when the power returned. Disaggregating the costs of irregular power supply indicates that 85 percent of the costs were due to loss in output. Mining companies had to spend large amounts on backup generation as well as stock up on additional fuel, oil, and grease required to run the backup equipment. Backup equipment was run on average 4 hours a day for at least five to six times per week. Smaller mines were far more impacted by unreliable power supply than the larger mines. The smaller mines were often unable to finance the large amounts of backup generation required and were unable to mitigate the costs of inadequate power. During power outages, a majority of the laborers were idle, waiting for the power to resume. This idle time led to significant costs for the mines as these laborers were paid even for their idle time. Overall, the outage cost per kilowatt-hour ranged from $1.20 to $13. In absolute terms, inadequate power supply led to massive loss in productivity for mining companies.

## _<u>Source:</u>_ Kaseke 2010.

Obtaining power connections in Zimbabwe is a lengthy and costly process. The situation during 1999 to 2006 indicates that the rate of connection of new customers declined by 50 percent while the waiting list for connections increased fourfold. The waiting time for new connectionslow-income countriewas reported to have increased from less than a month in 2000–01 to between 9 and 16 months in 2005–06 (World Bank 2008a), while 2010 estimates indicate that the wait time for firms is about 4 months (World Bank 2011). Moreover, the cost of making the connection once the opportunity arises is high; firms pay the equivalent of 650 times the country‘s per capita income to obtain such a connection, although this is not dissimilar to trends observed elsewhere in Africa (World Bank 2010).

Looking ahead, Zimbabwe has a key role to play as a transit country in regional power trade with the Southern African Power Pool (SAPP). The geographic proximity of Zimbabwe and the Democratic Republic of Congo—the country with southern Africa‘s greatest hydropower resources—makes Zimbabwe a key player in regional trade (figure 6).<sup>6</sup>

> 6 Future power demand can either be met through expanding national production or expanding cross-border power trade within the Southern African Power Pool (SAPP). Two alternative scenarios will be considered in this report. The _trade-stagnation_ scenario assumes that no additional cross-border interconnectors will be built, so that trade is constrained at the levels observed today, and countries are thus obliged to meet incremental power demands solely through the development of their own domestic power sectors. For many SAPP countries that lack significant energy resources of their own, this entails increased reliance on thermal generation fueled by oil imports. Alternatively, under the _trade-expansion_ scenario, future regional power demand is met by the most cost-effective energy resources available to the region as a whole, and additional cross-border transmission capacity is added wherever required to allow power to flow from production to consumption locations. Essentially, this scenario takes regional power trade to its fullest economic potential, assuming that there are no restrictions to cross-border exchange and that the necessary infrastructure can be built wherever it is required. Reality is likely to lie somewhere in between the trade-stagnation and trade-expansion scenarios, and in this sense the two scenarios serve to frame the range of possible outcomes.

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