Zera to decide on tariff increase

Zera to decide on tariff increase | The Herald March 4, 2016

Golden Sibanda : Senior Business Reporter

The Zimbabwe Energy Regulatory Authority will decide on Zesa Holdings’ request for a 49 percent power tariff increase before the end of this month, chief executive Engineer Gloria Magombo said yesterday.Eng Magombo said that the matter (for an increase) is now at Government level, where input response is awaited, adding she is positive the decision will be made this month.

The prevailing consistence in improved power supply can only be sustained if Zesa, which is seeking a substantial increase, gets an economic tariff for 2016. This is because the power utility is faced with a host of funding needs, among them capital projects and infrastructure maintenance.

ZESA’s obligations also include power imports from regional utilities, most notable being 300 megawatts coming from South Africa’s Eskom.

The imports are meant to close the gap between the country’s current generation of 1 050MW against peak period demand of 2 200MW.

Notably, Zesa ended frequent rolling power cuts that at times lasted for days on end, when it struck an import deal with Eskom, but questions have arisen about how long it can sustain this state of affairs considering it is paying close to $7 million upfront every month. The power utility has not been allowed to get an economic tariff since 2009.

The utility needs to significantly grow its revenue inflows in order to fund many obligations including capital projects and maintenance programmes, both key elements to ensure consistent supply.

An official who would not be named said Zesa’s proposed tariff hike of 49 percent was critical in determining the utility’s ability to sustain improved supplies, which is also being managed through imports.

This forms part of Zesa’s supply demand side interventions while supply side initiatives, including Kariba South and Hwange 7 and 8 expansions, are being developed to come on line starting from 2018.

Zesa has since applied to ZERA for an average power tariff increase to 15c per kWh from the current average tariff of 9,86c per kWh. This would help meet its huge, predominantly prepaid cash imports.

“Everything that Zesa will be able or not able to do depend on it getting an appropriate tariff. Zesa is likely to get an increase anyway, but if it is not sufficient that won’t help much,” the official said.

Engineer Magombo said that she is positive that the approved new tariff will strike a balance between interests of the producer and consumers.

“That is what will happen (awarding an economic tariff). We need to ensure that there is viability, not only on the side of the producer, but consumers as well. Balance is what is required when the decision is made; that is the aim all the time,” Eng. Magombo said.