Zesa tariff increase ill-advised, says Mthuli Ncube

By Staff reporter | 28 May 2019 at 10:06hrs
Mthuyli Ncube
FINANCE minister Mthuli Ncube says an electricity tariff increase at the moment would be "ill advised" as it may trigger price increases. This comes as Zimbabwe early this month started implementing load shedding, after the government announced it was facing critical power shortfalls and had to introduce rotational power cuts in order to "balance the power supply available and the demand".

Ncube told a parliamentary committee on Budget and Finance that government was aware of the unsustainability of the tariffs but increasing the tariff was not an option. "You will also agree with me that any ill-advised sharp increase of Zesa tariff rates, combined with power outages will be most unpopular and unwelcome and will certainly trigger another round of price increases.

"While we are aware that at the current exchange rate in real dollar term, the kilowatt hour tariff has gone down to two and half cents but any unwise sudden increase to bring the tariffs to regional levels will unleash another round of inflation," he said.

Early this year, the Zimbabwe Electricity Transmission and Distribution Company wanted to increase the tariff by 52 percent to $0,15 per kilowatt hour (kWh) from the current $0,0986 per kWh, to help in the maintenance of the electricity infrastructure and the importation of electricity that covers the country's low generation.

The Zesa Holdings subsidiary needs US$0,11 to produce electricity per kilowatt (kWh) at a time the country has been struggling to generate sufficient power, relying on imports from South Africa and Mozambique. "We have asked Zesa to come up with a strategy to make sure that the unbundling exercise approved by Cabinet in terms of coming up with one entity, begins to bear fruit so that we squeeze out the inefficiencies, so that these inefficiencies can also translate to manageable rates," Ncube said.

The cost of power in South Africa is US$0,14 per kWh, US$0,11 in Mozambique, US$0,07 in Zambia, Tanzania US$0,17 US per kWh and Namibia US$0,15  per kWh.

ZETDC recently said it had been forced to cut power generation at its Kariba Dam power plant due to low water levels. The dam, on the border of Zimbabwe and Zambia, is only 34 percent full and cannot generate electricity at optimal capacity. The ZETDC said in a statement it was also facing generation constraints at Hwange Power Station, and limited imports from Eskom in South Africa and from Mozambique.

Analysts say the impact of the power cuts will be significant to industry, which cannot easily turn to the use of generators amid limited availability of fuel.



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