Zesa wants 49pc tariff hike

Source: Zesa wants 49pc tariff hike – Sunday News Jun 4, 2017

Robin Muchetu, Senior Reporter
POWER utility company, Zesa has renewed its pursuit of seeking a 49 percent increase in electricity tariffs to help settle South African Eskom debt which nearly resulted in the neighbouring power generator cutting off electricity it supplies Zimbabwe daily.

Zesa owes Eskom $43 million and last week had to seek sanctuary from the Reserve Bank of Zimbabwe which then came up with a plan to settle the arrears in four months. In an interview, Zesa spokesman Mr Fullard Gwasira said his company was still pursuing the application for a tariff increase.

“We applied last year to the regulator Zimbabwe Energy Regulatory Authority (Zera) for a tariff increase and it was rejected by the Government, as a result the regulator then appointed an independent consultant to look at the cost structures at Zesa. So we are waiting for results of that study which will guide the regulator,” said Mr Gwasira.

However, Mr Gwasira added that the results from the independent consultant will give a true reflection of the happenings at his company and in turn justify the increase in the tariffs. The Government, last year, blocked Zesa from increasing its power charges to $14,64c/kWh from 9,86c/kWh arguing that instead of rushing to burden the consumer, the parastatal must recover more than $1 billion it is owed by individuals and institutions.

The Government had also been concerned over reports that Zesa was losing 40 percent of the power it is generating through transmission and distribution inefficiencies. Zera chief executive officer Engineer Gloria Magombo said Zesa has to apply again if it was seeking a review.

“As a regulator we do not talk about tariffs before we receive an application from the authority. One of the reasons why we do not do it is because when an application is being done we look at the merits of the application, what is it costing them, what is its energy mix on that then a decision is made. I cannot talk about a potential increase and decrease otherwise I will be jumping the gun,” she said.

Eng Magombo said an application has to come and be assessed independently and fairly before a decision is made.

“Our role is to balance the needs of consumers in the country and what issues they are raising in regards to cost of doing business and also looking at the viability of service providers for continuity of supply. So when we consider a tariff application, we also do a benchmark exercise with others,” she said.

However, industry and individuals have been arguing that Zesa must not increase its tariffs since they were already higher compared to what other regional producers charge. Angola’s average end user tariff stands at $5,4c/kWh, Malawi stands at $9c/kWh while Zambia’s average end user tariff is $6c/kWh. Lesotho charges $9,3c/kWh while Mozambique is at $9c/kWh and South Africa is at $8c/kWh.

Eng Magombo, however, said it was folly for people to complain about the differences as there were various factors that contribute to tariff differences.

“I would like to pour caution to the issue of comparison of electricity charges in Zimbabwe with that of the region. We need to look at the energy mix. How is their power supply? Are they predominantly hydro only like Zambia or thermal, do they have diesel generation in their mix, so depending on that your costs will be different, so when comparing you have to go back and see if you are comparing apples and oranges or apples and apples,” she said.

Eng Magombo said there was a need to factor in many variables before asking for the standardisation of tariffs to those in the region. Asked on the issue of banning the use of incandescent lights and how local manufacturers should assist this move she said:

“Local manufacturers know the regulations and requirements of the country. We have been consulting all the people who are in the manufacturing and importing of bulbs telling them of the direction the country is moving towards. We have to respect the laws of the country and the regulator and work with the Government to make the Zim-Asset target of saving 300 megawatts of power possible by ensuring that they manufacture the right products for the market,” she said.

In recent weeks, Zimbabwe was in panic mode after after Eskom threatened to switch off power supplies to the nation as it is owed $43 million under a power import plan. Nonetheless, the situation was put under control after the company engaged the central bank in negotiations with the South Africans, resulting in a fresh payment arrangement.

Eskom supplies Zimbabwe with 300 megawatts of power while Hydro Cahora Bassa of Mozambique supplies 50 MW per day. Zimbabwe’s power generation capacity has been heavily affected with the Zimbabwe Power Company relying only on Kariba and Hwange. According to its power update, ZPC has not been producing power at three thermal power stations Bulawayo. Munyati and Harare for almost two weeks. The country needs about 1 400 MW per day to meet its requirements.