Farmers reject 49pct power price hike

via Farmers reject 49pct power price hike – NewZimbabwe 13/01/2016

FARMER organisations on Wednesday objected to the proposed increase in electricity tariffs which they say will drive up the cost of production and compromise food security at a time the southern African nation is facing its worst drought in years.

Power utility Zesa Holdings subsidiaries have proposed a 49 percent tariff hike to 14,69 cents per kilowatt hour which they say is cost reflective and necessary to augment emergency power imports. Zesa has recently started to import 300MW from South Africa’s Eskom to augment local generation.

Zimbabwe Power Company (ZPC) is proposing a 22 percent increase in power costs from 5,06 cents per kilowatt hour  to 6,64 cents per kilowatt hour on sale to the distribution subsidiary, ZETDC. ZETDC is proposing to sell the power to consumers at 14,69 cents per kilowatt hour from 9,86 cents, an increase of 49 percent.

According to the ZPC website on Wednesday, the country  — which has an installed capacity of 1,960 MW — was only generating 1,100MW. On Tuesday, power generation was at 975MW.

Commercial Farmers Union (CFU) President Peter Steyl told a meeting to debate the proposed tariff increase that, if implemented, it would result in a drastic fall in productivity on the farms.

“We are really not keen on this proposal because power is a key cost driver and this will drive up the cost of food. Already with the poor rains that we are experiencing it is going to be a difficult season, adding on to the cost will not make us competitive,” he said.

Zimbabwe, like most of the region, is facing a severe drought due to the El Nino phenomenon.

Steyl said the power utility should streamline its operations and improve efficiencies to bring down costs before calling for a tariff increase.

It is estimated that close to 20 percent of the electricity generated is lost during transmission and distribution because of poor infrastructure.

Zimbabwe National Farmers Union (ZNFU) executive director, Edward Tome said an increase of the power tariff would not be affordable and result in more customer defaults.

The power utility is owed up to $1 billion, with government departments accounting for the majority of the debt. The agriculture sector is said to have accumulated debts to the tune $120 million.

“We are going to record higher consumer defaults, a development which will erode the utility’s credit rating. As it is, consumers are struggling with the current tariff,” said Tome.

The tariff increase would put Zimbabwe at par with regional peers Namibia which charges 14,21 cents per kilowatt hour and South Africa at 13, 45 cents.  Zambia charges power at 10,35 cents per KW/H and Botswana 9,74 cents.