RURAL Electrification Agency (REA) pole making subsidiary, Hotspeck, is set to expand its regional market as it seeks to raise capital to intensify the country’s rural electrification programme, an official has revealed.
The Mutare-based company is wholly owned by REA and was established in 2012 to provide treated poles to REA for rural electrification projects.
But Hotspeck has been exporting its products to Mozambique and Zambia to raise funds to boost its operations.
In an interview, REA public relations and marketing executive Johannes Nyamayedenga said most of the countries in the region were embarking on electrification programmes and have become huge consumers of poles from Hotspeck.
“At the moment we are only exporting poles to two countries in the region, but with the growing demand for our products, we are planning to grow our market into all countries in the region,” he said.
“Recently, we were negotiating with people from DRC, they are doing a rural electrification programme and they want poles.”
Currently the company produces 100 000 poles a year and REA uses about 20 percent of the poles, the rest are sold to local companies that include ZESA and the rest are exported.
REA in the past relied heavily on the levy from electricity sales and funds allocated by Government for its programmes, but the wood project has enabled the company to raise funds to broaden its rural electrification project.
Nyamayedenga said expansion of the market will help generate more capital for the rural electrification projects presently hamstrung by the prevailing liquidity crunch.
“Much of the profits that will be generated from the broadening of the market will be directed to the rural electrification programme. Since its establishment, the company has propped up REA operations.”
Hotspeck sales and marketing manager, Lovemore Chipunza said the increasing demand for products had buoyed operations of the company.
Most companies in the country are operating below capacity utilisation as a result of challenges induced by the illegal sanctions imposed by the West.
“We have set a target of US$5 million revenue for this year, right now we have achieved about 40 percent of the target,” he said.
Nyamayedenga said REA was no longer experiencing operational challenges as there were no more shortages of transmission poles.
He said the multi-million dollar woodpole treatment plant had reduced operational costs.
“The cost of constructing an electricity line ranges between US$15 000 and US$30 000 per km, but the commissioning of the plant has since reduced the costs as REA now produce poles for its own use and export the surplus,” he said.
The project has lowered prices of transmission poles by at least 40 percent.
Meanwhile, REA has completed more than 7 835 of its electrification projects throughout the country.
The programme had almost ground to a halt after the remaining local pole treating companies chose to export their products to foreign markets in order to generate foreign currency to ensure survival.
Nyamayedenga said the agency has intensified its projects to ensure that key institutions in the country have access to electricity.
“We have managed to complete a significant percentage of our targeted electrification projects in the country,” he said.
“By June this year, we had managed to complete the electrification of 2 042 primary schools from a target of 5 327, 1 157 from a target of 2 188 secondary schools, 762 clinics from a target of 1 338.
“We have also managed to electrify 901 business centres, 1 074 villages and 686 small-scale farmers,”
Currently REA has an uptake of 20 000 poles a year which is expected to rise to about 50 000 in the next five years.
Hotspeck has plantations in Mutare and uses automated machinery acquired from Denmark at its pole treatment plant.
It also produces cross arms, telephone or fibre optic poles, fencing and roofing poles which are treated with creosote.