Industry supports electricity tariff hike

By Staff reporter | 13 Jun 2019 at 19:38hrs
THE Confederation of Zimbabwe Industries (CZI) says it would support an upward electricity tariff if this will help to reduce load shedding.

This comes as the country's struggling businesses are buffeted by new headwinds including acute power shortages, rising fuel and labour costs, and lack of access to cheap capital for retooling.

Zimbabwe started load-shedding in mid-May due to a combination of low water levels at the dam's hydroelectric power plant, generation constraints at other power stations and limited foreign imports.

CZI said current tariffs being charged by the national power utility Zesa Holdings (Zesa) were not sustainable.

"In the past, when Zesa was facing such shortages, it appealed to its customers and to industry for help.

"Zesa is therefore appealing to CZI membership for support in mobilising foreign currency and generating local currency," the industry body said in a note to its members.   

Uneconomic electricity tariffs and high country risk have resulted in Zesa and its subsidiary the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), seeking a revision of the current tariffs.

However, the Zimbabwe Energy Regulatory Authority has on several occasions shot down the proposals citing the need to "protect" consumers.

In April, Zesa requested for a 30 percent increase in electricity tariff, which it said was key for sustainable electricity generation.

The country's sole electricity producer and distributor also said the proposed adjustment would align the tariff to the prevailing exchange rate following the introduction of an inter-bank foreign currency market by the Reserve Bank of Zimbabwe in February.

Zesa has incurred cumulative losses amounting to $524 million since dollarisation in 2009 emanating from a non-cost-reflective tariff, and losses of $9 million per year due to a shortage of transformers.

The State-owned power producer, which is saddled with a US$71 million import bill, is also reeling from a $3,6 million loss due to theft and vandalism.

To remain afloat in a tough economic environment, Zesa recently said it had to pursue various options which include levying a forex tariff on clients who can afford to pay as electricity tariff subsidies become increasingly unsustainable.

Zesa cited the fall in water levels in Kariba as the main reason for reduced power supply.

Kariba Hydro power plant, the largest electricity producer in Zimbabwe with a capacity of 1 050 megawatts, is generating less than a third of what is required due to low water levels caused by a severe drought.

The breakdowns at Hwange thermal power stations have not helped the situation. Coal price has increased by 500 percent and diesel price has also increased phenomenally. Zesa indicated that despite all these increases, their tariffs have remained stable since 2011.



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