Ambitious plans to expand power production by 2018, but sector is beset by corruption
* Corruption rampant in power sector-report
* Blackouts cripple business profits
* Lawmakers call for arrest of top officials
By Madalitso Mwando
BULAWAYO, Zimbabwe, March 20 (Thomson Reuters Foundation) - Jeffias Moyo kickstarts a generator and waits for its reassuring hum to fill the air at a maize grinding mill in Zimbabwe's second largest city.
Operating three mills in one of Bulawayo's many working class townships, Moyo knows all too well the frustrations of trying to run a business without reliable electricity.
Frequent power cuts mean resorting to a generator, solar panels and even car batteries to breathe life into machines that strip and pound kernels of corn until they become a fine powder.
What should be a thriving business faces unpredictable costs in the southern African country where, like many residents and businessmen, Moyo pays twice for energy - once to the state power authority and again for back-up energy when the electricity fails.
"I bought a generator which I alternate between grinding mills, but I cannot survive," he said. "This thing requires a lot of fuel."
The cuts have no fixed schedule, sometimes lasting for eight hours in a working day, making it nearly impossible for Moyo to budget for the fuel to keep his mills running. The extra costs can cut 25 percent from his profits each month.
While Zimbabwe has ambitious plans to expand its power production by 2018, the sector is beset by corruption scandals.
Lawmakers have called for energy projects to be cancelled and for high-level arrests over charges of inflated costs.
Last month, former energy minister Dzikamai Mavhaire, his deputy Munacho Mutezo and a local investor were accused in a parliamentary report of corruption involving an ethanol plant.
According the report, Mavhaire received kickbacks from local bio-fuel firm Green Fuel, which was awarded a $2 billion contract for an ethanol project to produce fuel from sugar cane in Chisumbanje, eastern Zimbabwe.
Mayor Justice Wadyajena, who chairs a parliamentary committee that has led several probes of energy projects, told parliament in February that Mavhaire "must be investigated to establish the truth" on the Green Fuel project.
President Robert Mugabe's government has not opened an investigation into the allegations. Green Fuel did not answer emails and phone calls requesting comment.
CHINESE INVESTMENT
Zimbabwe has one of the highest rates of perceived levels of public sector corruption in the world, according to Transparency International.
Local media routinely report that state-owned companies are plagued by corruption, including flouting tender procedures to hand contracts to related parties.
China, whose support of Mugabe stretches back to the days when it backed his guerrilla war against white-ruled Rhodesia in the 1970s, has won major power contracts without competitive bids, prompting accusations of corruption by critics.
As part of its plans to boost its energy sector, Zimbabwe is expanding its biggest power plant, the Hwange Thermal Power Station in the northwest, and hydroelectric power generated from the Kariba dam on the Zambezi river to the north.
Together these projects by 2018 would add 1,200 megawatts to the current national supply of 1,700 megawatts, enough power to exceed daily demand by more than one third.
But costs have soared by over 25 percent. In the first call for tenders, the Hwange plant was priced at $1.1 billion and since has risen to $1.5 billion, while costs at Kariba South have ballooned from $355 million to more than $500 million.
Mugabe declared last December that major national projects would be awarded to Chinese firms without going to tender. The Kariba South and Hwange projects were awarded to China's Sinohydro Corp., financed by China's Exim Bank.
In parliament last year, former finance minister Tendai Biti disputed the value of the projects, and said the Chinese were "fleecing" the country in cahoots with senior government officials.
Mavhaire refused to answer questions about the energy projects. When contacted by the Thomson Reuters Foundation, he said: "I don't talk to journalists."
Last October, before he was fired, he told state media that the upward revision of the Hwange project factored in other costs including consultancy fees and interest on the loan.
Zimbabwe's current Energy Minister Samuel Undenge and Sinohydro officials did not respond to emailed enquiries about parliament's allegations of inflated costs.
TAPPING POWER LINES
While former government officials face charges of siphoning millions from public projects, private businessmen are busy pilfering from the grid.
"Everyone I know relying on electricity is doing it," said Lungile Sidambe, who runs a small panel and spray painting shop in Bulawayo's Kelvin North light industrial area.
They tap main power lines to get free electricity.
"You get all the electricity you want but it is of course dangerous as you can be electrocuted if you mess up the connections," Sidambe said.
He and others see little choice if they want to stay in business. The Confederation of Zimbabwe Industries cited prolonged power cuts as one of factors explaining why industrial activity shrank as a share of GDP from 39 percent in 2013 to 36 percent last year.
Loughty Dube, chairman of Transparency International Zimbabwe, has little confidence corruption charges would change anything. Instead institutional change is needed, he said.
"The first thing is to put in place structures so that ministers do not do as they please," he said.
(Editing by Stella Dawson)
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