Hydrological risks in Africa’s copper producer have heightened significantly following receding lake levels at the Kariba dam that has resulted in ebbing higher of the power deficit to 700MW. This was contained in a memo to staff from the power utility company’s Chief Executive Officers office.
Zambia’s power bottlenecks have tripled from the 273MW reported earlier in June. The memo echoed the receding dam levels allowing for only 3 generators to fire 325MW to the grid which ZESCO intends to supplement with 300MW in imports from South Africa at a cost proposed to be passed onto consumers. Kariba dam lake levels plummeted 7cm during the week (ending 16 September) to 478.18m (translating to 19% usable storage) compared with 485.80m (79% usable storage) same time a year ago.
Hedging using imports from South Africa
Earlier in the week Energy Minister Matthews Nkhuwa hinted a 75% tariff hike on the horizon to allow the power utility raise financing for the requisite power imports. Load management has widened to a minimum 8 hours with parts of the country experiencing upto 12 hours of power shedding to preserve power.
Rising ‘cost push’ risks to inflation
With rising risks to inflation that last printed at 9.3% analysts forecast a significant jump to 12%-14% in the September print, likened to a dejavus of the year 2015 when Zambia grappled with 525MW energy poverty. With the mines gobbling 56% of the grid, mining productivity remains at risk with 2019 expected levels at 100,000 metric tons lower as predicted by the Chamber of Mines.
Deteriorating private sector pulse
Business pulse as measured by Purchasing Managers Index (PMI) remains deep in the doldrums at 46 for 11 months in row given rising risks to growth following an elevated cost environment, lack of liquidity and weak aggregate demand. Energy bottlenecks only worsen manufacturing activity to weigh gross domestic product growth.
The Brexit Consultant
