Electricity charges to go up

By Staff reporter | 17 Jun 2019 at 11:32hrs
GOVERNMENT is considering an upward review in electricity tariffs to enable power utility Zesa Holdings to operate viably.

Energy and Power Development minister Fortune Chasi told the Daily News on Sunday yesterday that Zimbabwe's power is currently the cheapest in the region and is not cost reflective.

"We need the charges of power to reflect the actual cost or bear some semblance of a relationship with those costs.

This is key not only for the viability of Zesa but also to unlock further investments into the power sector. Zesa cannot be attractive to investors when their power is literally being given away," he said.

Chasi said when the tariff is so sub-optimally low, respect for or conservation of power is not engendered because consumers will perceive the product as worthless as it is free, and in apparent abundance.

Asked if Cabinet was seized with issue, Chasi said: "The matter of the tariff increase is under active consideration."

In April, Zesa requested for a 30 percent increase in electricity tariff which it said was key for sustainable electricity generation but the proposal was shot down by the Zimbabwe Energy Regulatory Authority.

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 while it is saddled with a US$71 million import bill.

It is also reeling from a $3,6 million loss due to theft and vandalism.

To remain afloat, Zesa said it had to pursue various options which include levying foreign currency tariffs on clients who can afford to pay.

Uneconomic electricity tariffs and high country risk have resulted in Zesa and its subsidiary the Zimbabwe Electricity Transmission and Distribution Company, seeking a revision of the current $0,0986 per kWh tariff.

The last tariff increase was in 2011.

In a speech at the Zesa Risk management awards this week, Chasi said it is common cause that the cost of electricity has been severely eroded following the monetary policy statement (MPS) by the Reserve Bank of Zimbabwe (RBZ) in February this year.

The MPS liberalised the exchange rate by introducing an interbank market, which saw the 1:1 parity which the central bank had maintained between the bond note and the United States dollar falling away.

Chasi said an equal adjustment in the tariff should follow these developments on the interbank market.

He however, cautioned that the impact of such adjustment to the economy needs to be managed carefully.

Meanwhile, the Confederation of Zimbabwe Industries (CZI) said it would support an upward electricity tariff if that would help to reduce load shedding.

CZI acknowledged that the current tariffs being charged by the national power utility Zesa Holdings were not sustainable.

This comes as the power utility has started stage two of power outages which will see many households, businesses and hospitals going without power for 17 hours or more, a development that has been met with dismay from consumers who are outraged by the outages.

"What kind of load shedding is this? We spend the whole day without electricity and the electricity comes back midnight only to be switched off in the earliest hours of the morning (4am).

"We don't get to use the electricity, we are as good as those in remote areas where there is no electricity at all," said one outraged consumer form the Northern suburbs of Harare.

Zesa spokesperson Fullard Gwasira said the public must know that load shedding is something dynamic as it depends on the demand side, but assured the public that the power utility is doing everything possible to improve the situation.



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