Adjust tariffs or risk total blackout, says Zesa

By Staff reporter | 20 Sep 2019 at 20:14hrs
ZIMBABWE'S power utility, Zesa Holdings, says the country is at risk of a total blackout if the current low tariffs are not adjusted.

This comes after the power utility has been seeking to increase the tariffs, which it said have been wiped out by the spiralling exchange rate.

Appearing before Parliament's Energy Committee for a pre-budget meeting, Zesa Holdings and Energy ministry bosses underscored the urgent need to review the tariffs which were too low, resulting in the power utility running at a loss.

The power utility increased tariffs last month and adopted a threefold stepped billing system for domestic consumers of electricity.

For the first 50kWh consumers pay $3 then $45 and $68 for 150kWh and 250kWh accumulatively.

This meant that Zimbabweans were paying $0,06 per KW/hr. At the interbank rate of $13,5: US$1,  consumers were paying US$0,004 per KW/hr.

Zimbabwe is currently importing power from South Africa's Eskom, which is charging about US$0,06 while Zambia, which shares Kariba Dam with the southern African country, charges US$0,04.

Namibia, which also draws 80MW from Zimbabwe's national grid, charges US$0,13.

This means that Zimbabwe is importing power and selling it at an extremely discounted rate.

"We started at 2,5 (interbank exchange rate in February) and now it's 15. The agreement with all the suppliers is in foreign currency.

"They stopped supplying and we went for almost two weeks without coal so we had to give in to their demands," said Zesa group chief finance officer Eliab Chikwenhere.
"The same thing applies to the Zambezi River Authority (ZRA), who were insisting on payment in US$, but now through the intervention of the ministry we are now paying at the interbank.

"So until that problem is resolved we are now facing a disaster not in the long term, but in the short term, because the exchange rate is moving very fast every day and the tariff is (being wiped out)."

Zesa, after receiving a green light from the government, started billing exporters and foreign currency earners, like mines and manufacturers, in foreign currency, but the hard currency was quickly consumed by debt and more imports.

"It is the forex that they pay that we use for our imports. As for Eskom, the bill is due on the 5th (of October) and if we don't pay by the 5th (we will be switched off)," added Chikwenhere, who revealed that Zesa had so far received around US$10 million.

He told the legislators that the power utility had already made losses as its consumers  are paying off debt amounting to US1,2 billion in RTGS$, instead of in foreign currency.

"Zesa lost around $900 million during the conversion from the multi-currency regime."

Zimbabwe Energy Regulatory Authority (Zera) acting chief executive Eddington Mazambani said maintaining the current tariff would cause Zesa "to go under".

Energy ministry Finance director Nelson Muguwu also pleaded with the parliamentarians to intervene.

"Since I joined the ministry in 2015, the ministry has always been making noise about tariffs.

"There are approval processes and at some critical stage that's where the matter tumbles, but the ministry, regulator and the power utility will be together shouting for a tariff increase," he said.



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