via Massive increase in power tariffs looms | The Herald February 6, 2014 by Golden Sibanda
ZIMBABWEANS could face the biggest increase in the cost of power since dollarisation after the Zimbabwe Electricity Transmission and Distribution Company proposed a 5 percent tariff increase, way above the inflation rate which stands at 4.3 percent. ZETDC made theproposal during a tariff review stakeholder consultative meeting, also attended by fellow Zesa Holdings subsidiary — Zimbabwe Power Company —with the Association for Business in Zimbabwe in Bulawayo late last month.
ZETDC said a marginal increase in the tariff will be detrimental to its operations in the long-term.
It said a 5 percent increase was in line with inflation.
The firm said only one significant increase had been effected since dollarisation of the economy in 2009.
“Average expenditure has been higher than the average tariff awarded. Tariffs awarded (are) not sufficient to sustain the minimum activities of the utility,” said ZETDC.
A tariff of US9, 83c per kilowatt hour was awarded in 2009, but was reversed and replaced by a US7,53c/kWh in February 2009. There was no tariff hike in 2010 while a US9, 83c/kWh raise was approved for 2011.
ZETDC said there was no tariff change in 2012 with a 0,3 percent increase to US9,86c/kWh effected in 2013 as the utility made losses since 2009.
The tariff hike request, the firm said, was meant to enable mobilisation of resources to fund plant and network maintenance backlog, correcting distortions in the current tariff, with the current cost of running the business at US10,51c/kWh.
The 5 percent tariff increase proposal is based on a US$986 million revenue requirement, which ZETDC said was in line with its 2014 planned expenditure.
It said the proposed tariff was premised on the rate of return methodology, an approved methodology widely used by other power utilities internationally.
The company pointed out that while its revenue requirement is based on budgeted expenditure, the effective electricity tariffs should be cost-reflective covering efficient costs of its operations only.
The power utility’s proposals may however meet stiff resistance from already burdened consumers some of whom believe that there are flaws in ZETDC’s model, pertaining to alleged inefficiency (and its effect on cost) as the utility is not splitting the various customer types in the cost of supply model.
“I believe we should present an analysis of this, possibly by using the relationship of various supply types (188, 33, 11kVA, domestic etc) from other countries,” said one captain of industry in mining.
ZETDC has since lined up a number of measures to improve efficiency and these include installation of statistical meters to help manage losses.
There will also be migration to pre-paid meters to reduce customer service costs, network system upgrade and refurbishment to improve on transmission network reliability and help reduce losses.
Further, there would be upgrading of billing system and minimising staff costs by keeping staff strength at 80 percent of requirement while cost centers will be managed down to depot-levels.
It is expected that this will result in improved service delivery, value for money, better infrastructure maintenance and availability, improved power supply security through generation expansion projects and viability of the utility.
COMMENTS
Break it up and privatise. Nothing else will work. All the government options have been tried and have failed. Customers need choice. For now we are forced to deal with these dead beats.
It is hard to sell an increase when the CEO earns $180 000 a month. Stop the looting first then reassess the viability of the business.
I have always suspected that these political appointees are over paid at ZESA.@Betty above has proved my suspicion.How do you expect a company to become viable when their managers paid such unrealistic salaries and allowances? Our system has really created us problems so hard to resolve because its changed people’s mindsets to feel so important as compared to the rest of us.
As long as salaries and perks are more than 30% of your revenue,it is impossible to make that organisation viable.
ZESA claims that they use the return methodology to justify its request for tariff increase because other countries use it but they do not tell us how they compare with those countries in tariff fees and efficiency.Zesa returns will always be below their forecast figures due to high salaries and inefficiency.The higher the tariffs become the higher their salaries and inefficiency become,its a terrible cycle which needs strong political intervention to correct it.
This is why I am doing everything possible to become independent of Zesa energy.They keep on talking about proposed new generation projects but we see nothing except more load shedding and power cuts due to faults which lower their revenue returns.
Zesa should reduce their electricity allowance per employee and pensioner to show the public that they are also trying to turn around their company NOT to depend on tariff increase all the time.
Only when all the ZESA salaries right down to the floorsweepers are made public will any memeber of the public feel like paying any increased tariff.
Sensible as usual Mr Mixed
Am I seeing things right ….. 1.0 Kilowatt of electricity costs the consumer around US$10.00, which equates to £6.25. Frankly, if this is true, then I am in total shock. In the UK I pay £0.14 per Kwh (US$0.22), which includes all service charges, and even this is considered a rip-off.
Little wonder that Zimbabwe has very serious problems indeed.
Didn’t spot the C in the prices, silly me !!!
Who needs electricity? We are used to be in the dark. Let everything collapse. We will rebuild our own FREE Zimbabwe after Mugabe and his cronies bit the dust. Let them ransack what is left. Upfumi ndehwe pasi. Garke tange nhamo. Shingirirai, kwakuda kuyedza. Mugabe akafa, zvapera. Munangagwa mugwere, will not last, because ARVs ane time span.