Government rejects ZESA’s electricity tariff hike proposal

Source: Government rejects ZESA’s electricity tariff hike proposal | The Financial Gazette July 21, 2016

GOVERNMENT has rejected a hike in electricity tariff proposed by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), the Financial Gazette can report.

ZETDC, a unit of ZESA Holdings, had last year proposed an upwards review of electricity tariff by 49 percent, a move which would have seen electricity consumers paying US$0,1469 per kilowatt hour (kWh) from an average US$0,0986 per kWh.

But the Zimbabwe Energy Regulatory Authority (ZERA)’s board chairperson, Ester Khosa, yesterday said the proposed increment was unnecessary and disclosed that they have ordered ZETDC to maintain the current tariff of US$0,0986 per kWh.

“After duly considering the tariff application, the written and oral submissions from various consumers groups and stakeholders as well as facts and evidence provided by ZETDC, the ZERA board on June 14, 2016 made a determination that the current tariff of US$0,0986 per kWh be retained for 2016,” said Khosa.

Khosa said the decision was made due to poor performance of the economy, the need to support government in reducing the cost of doing business, the need for the power utility to improve efficiency levels as well as implementing cost cutting measures.

She added that her board also considered views and concerns from various stakeholders consulted during stakeholders meetings.

Khosa also disclosed that ZERA is immediately engaging an international consultant to look into the cost structures of the utilities.

“As a way forward, in terms of addressing the stakeholders’ concerns, ZERA will be engaging an international consultant to examine the underlying cost structures of the utilities and recommend potential areas of cost savings and efficiency improvement. This is key to ensuring sustainability given the increased cost of supply due to changes in the energy mix,” said Khosa while urging ZESA to reprioritise new projects, improve revenue collection given the high levels of debt and reduce losses.

ZESA has for the past four years been pressing government to approve a tariff increase, but its pleas have found no takers at Cabinet level.

The power utility is owed more than US$1 billion by electricity consumers and has been struggling to collect this debt.

The Financial Gazette last week reported that President Robert Mugabe’s administration had no appetite to approve the electricity tariff increase before the make or break 2018 elections fearing the ruling ZANU-PF party’s popularity ratings would plunge further ahead of the crucial elections.