Zesa tariff hike gets nod

Source: Zesa tariff hike gets nod | The Herald April 22, 2016

Business Reporter
The cost of electricity is set increase after the Zimbabwe Energy Regulatory Authority approved an average tariff of 11,2c/kWh from 9,83c, sources said yesterday.

Power utility, Zesa Holdings had applied for a tariff increase of 14,6c/kWh to help finance imports to mitigate power shortages and expanding generation capacity.

In order to ease load-shedding, imports of electrical energy were at $47,63 million as suppliers from Mozambique and South Africa were operating on a cash basis model.

However, the situation is unsustainable going forward as the import tariffs are higher than what is currently obtaining especially when the power utility is saddled with a +$1 billion debt.

“After a careful study of the proposal from Zesa, an average tariff increase of 11,2c/kWh has been granted,” said an official in the Ministry and Energy and Power Development.

“Several issues were looked into including economic hardships facing the economy and ability of customers to pay. Remember, Zesa is owed about $1 billion by domestic and commercial customers and granting the proposed tariff would have worsened the consumers’ situation.”

No comment could be obtained from Zesa by the time of going to print yesterday. The average power tariff of 11,2c per kWh is, however, lower than the price at which Zesa is paying for imports from South Africa and Mozambique.

Zimbabwe is importing power mainly from Mozambique, where it is seeking more, and South Africa and this has seen a drastic reduction in power rationing.

Prior to Zesa’s power importation programme, Zimbabweans had been enduring long periods of power cuts, which severely affected businesses, including mines.

Zesa is also still negotiating with Mozambique’s EDM to import an additional 40 megawatts with the power utility seeking to secure a tariff that is less onerous to users.

Secretary for Energy and Power Development Partison Mbiriri recently said the power utility will be guided by what obtains in the region in terms of the tariff rate it seeks to agree with EDM.

This comes as it emerged EDM had bargained for a tariff of about 15c/kWh, but Mr Mbiriri said rates between 13c/kWh and 15c/kWh would be on the high side.

Zesa has previously indicated that it is seeking an economic tariff to be able to maintain consistent and sufficient supply of power, including augmenting with imports.

The power utility might have to depend significantly on imports until a series of Government and private sector projects are completed, at least in the next three years.

Eng Magombo said recently that the target is to try and approve a power tariff rate that is economic for the producer and also affordable to the consumers.

The power utility is currently working on supply side interventions that entail expanding capacity at Kariba South hydro power station by 300MW and Hwange by 600MW.