OK Zim calls for fuel relief

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RETAIL group OK Zimbabwe says authorities should consider relief for businesses procuring fuel for productive purposes in light of the increased reliance on generators due to power cuts.
This comes as the country has, over the past few months, been experiencing its worst power crisis on record, with businesses and households having to endure power outages of up to 12 hours a day.
“Shortage of grid power resulted in increased reliance on generator fuel. Authorities should consider relief for businesses procuring fuel for productive purposes,” chairman Herbert Nkala said during the group’s performance update.

Zimbabwe mainly relies on hydro and thermal energy sources, but antiquated electricity infrastructure, decades of non-maintenance, foreign currency shortages, legacy debt, sub-economic tariffs, and climate change-related factors, have led to power generation being supplemented by imports and independent power producers.
Declining water levels at the country’s largest hydropower station in Kariba have resulted in a significant drop in generation, which has exacerbated power shortages in both Zimbabwe and Zambia, while other smaller power plants built before independence have been mothballed.
Meanwhile, OK Zimbabwe’s revenue for the half-year period ended September 30, 2023 grew by 60,38 percent to $727,9 billion from $453,8 billion in the comparative period last year, while profit after tax for the period was $21,2 billion.
Nkala said the group utilised credit facilities to fund its strategic growth initiatives through its medium to short-term growth plans and this resulted in net finance charges increasing 63,86 percent.
Capital expenditure for the half year increased to $16,8 billion from $7,4 billion in 2022.
“Most of the capital expenditure was channelled towards the new Bon Marché Marondera store and several new Alowell Pharmacy outlets that are now fully operational instore at selected branches,” Nkala said.
As a consequence of the exchange rate deterioration, the cost of doing business continued to increase to unsustainable levels.
Resultantly, in historical cost terms, operating costs increased by 886,83 percent mainly driven by utilities and backup power expenses, transport and delivery, maintenance expenses, and labour costs.
The group incurred significant exchange losses on its foreign-denominated liabilities and leases amounting to $32,4 billion, negatively impacting profitability.
Nkala said the group has put in place a comprehensive business and volume recovery plan to restore the business to sustainable growth and profitability.
“The group has implemented cost optimisation initiatives across the operations, streamlining processes, renegotiating supplier contracts, and implementing efficiency measures to reduce overheads,” Nkala said.
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