via Electricity tariff increase looms | The Herald October 26, 2015
Zimbabweans have to “bite the bullet” and embrace significant power tariff increases beginning next year if the load-shedding hours are to be reduced, Energy and Power Development Minister Dr Samuel Undenge has said.
This will be as a result of the emergency power plants that Zesa intends to unveil beginning February next year as it battles to boost the country’s electricity generation.
The country is experiencing serious power shortages.
Addressing a Zimbabwe National Chamber of Commerce breakfast meeting in Harare last week, Minister Undenge said Cabinet had already approved the introduction of emergency power plants which generate power using gas or diesel.
He said while the country waited for the big power projects to bear fruit, the current situation called for “sacrifices” and tariff adjustments were unavoidable next year.
“Tariff adjustments are inevitable in 2016 but we will make sure that these will be minimum,” Minister Undenge said.
“Zambia recently announced a tariff hike of almost 100 percent. The situation we are in is not normal and therefore we need to bite the bullet. Power is not going to come cheaply. We will have to sacrifice if we are to lessen our load-shedding hours. Yes, things are tough but we should pay for our services.”
Consumers are being levied about 9,86c/kWh and the use of diesel generators will see cost moving to 14c/kWh.
Previous attempts by Zesa to increase the tariffs were turned down by the regulator, the Zimbabwe Energy Regulatory Authority.
Minister Undenge said meteorologists were forecasting a low rainfall season and Zesa might be forced to reduce water consumption at Kariba further worsening the situation.
“The immediate solution to avert a near disaster is to install what are called emergency power plants,” he said.
“These are modules of diesel generators which can be installed in the shortest possible time. We are already working on installing these as early as February 2016. This has already been approved by Cabinet. To most of you this is nothing new as you have back- up generators at your companies as well as homes.”
He added: “I have no doubt that your experience so far with these generators is that they are convenient but are expensive to run. If you were to put a tariff on them then certainly this will not be less than 35c/kWh whereas our tariff is on average 10c/kWh. The advantage with the emergency power plants which we are installing is that the final tariff will be a blend of the tariffs of all generators hence we will be well below 35c/kWh (14c/kWh).”
Minister Undenge said Zesa would begin with emergency power plants of 200MW which will later be complemented by the 120MW that will come from the Mutare Peaking Power Plant.
The Mutare power plant, which will take just under 18 months to complete, would be powered by a dual mechanism that can either run on gas or diesel and is one of the priority projects targeted under Zim-Asset.
Zesa engineers have done due diligence on Ansaldo Energia, the Italian company that will supply the contractor, Helcraw Electrical (Pvt) Ltd, with equipment and a ground-breaking ceremony is expected soon to pay way for construction.
Countries like Mozambique, Botswana, Kenya, Tanzania and Zambia have gone the route of emergency power suppliers to alleviate power shortages.
Tanzania, which announced plans to switch off all hydropower plants this month due to low water levels in its dams, is renting diesel-powered generators provided by the emergency power suppliers.
Minister Undenge said to avoid a further accumulation of the $1 billion owed Zesa by consumers, every customer should be either on prepayment meters or smart meters.
“Only this way can we be assured that our collections will meet our obligations especially funding of new projects and such initiatives like emergency power plants,” he said.
The country has been experiencing acute power outages due to the low water levels at Kariba Dam with some residents going for 18 hours a day without electricity
ZPC is generating under half of the required 2 200MW and is working on various other projects, including expansion of existing power plants that will produce over 3 000MW in the next six years.
The projects, some of which are funded by the Chinese, are worth an estimated $5 billion and are in line with the provisions of Zim-Asset.
The current crisis has seen Government ordering major mining companies and other large electricity consumers to reduce consumption by up to 25 percent.
Security cantonments have also been asked to load-shed non-critical areas.
COMMENTS
The tariff schedule for any utility must cover all costs plus a small profit (for rainy days if nothing else) part of which will go for dividends to the owner. In Zimbabwe’s case, to the Government to ensure sustainability. Costs must include payments on the various mortgage’s, fuel, maintenance, labor, bribery, theft, corruption, and a myriad cacophony of miscellaneous costs. Most of all, the future must be forecast and provided for in a timely manner. Does this sound like something that Zimbabwe should have done? As most if not all of Zimbabwe’s Parastatals are meant to be public utilities this applies to them as well. A possible option for the government is to sell (privatize) some of them but being a communist country this is probably not realistic.
The bright spot is to compare Zimbabwe to someone with similar electric loads. Take Hawaii, (the U.S. 50th State) They have a peak demand of about 1.2gw (probably Zim,s peak load now that it is deindustrialized) and a population of about 1.5 million people. The cost of electricity is over USD 0.40 per kwh. But there is never any load shedding, and any outages are very local and last only a few hours maximum. Even for a country with Hydropower and ample fossil fuel resources, USD 0.09 is peanuts. No wonder your utility is moribund.
As per normal. We are expected as a matter of course to “bite the bullet” to make up for the government’s perennial incompetence.