ZESA seeks tariff increase for non-existent power

POWER utility Zesa Holdings is seeking regulatory permission to increase electricity tariffs by as much as 29 percent to cover rising operational costs, sources at the company said.

Zesa has proposed an average tariff of between 12,2c kWh and 12,7c kWh from the average 9,86c kWh. The proposal for the tariff hike has been submitted to the Zimbabwe Energy Regulatory Authority for consideration. Analysts, however, said given the current economic challenges, Zimbabweans might not be ready for a tariff increase.

"We arrived at that range because it is cost reflective," said the source. "At the same time, we need to have money for capital projects and for importing additional power." Zesa is currently generating close to 1 000 MW, far below peak demand requirement of 2 200MW. No official comment could be obtained from Zesa by the time of going to print yesterday.

ZERA chief executive Engineer Gloria Magombo could neither confirm nor deny. She said she was away and would not know if the power utility had submitted the tariff hike proposal or not.

Energy and Power Development Minister Dr Samuel Undenge recently told a business meeting that Zimbabweans should brace for a significant increase in tariff to boost demand. "Tariff adjustments are inevitable in 2016, but we make sure that these will be minimum," he said. "The situation we are in is not normal and we therefore 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 the service," he added.

Zesa had previously sought permission for a tariff increase, but was turned down by the regulator. Economists say consumers, particularly commercial cannot afford a tariff increase as high costs of electricity and unreliable supplies have been identified as one of the factors affecting competitiveness of local business.

Zimbabwe is currently implementing various projects to boost electricity supplies. Work on the expansion of Kariba Hydro Power Station – to increase the capacity of the plant with 300MW – is underway.

Early this month, Zimbabwe signed preferential buyer credit loan of close to $1 billion with Eximbank of China for the expansion of Hwange Thermal Power Station. The loan will be extended at a concessionary rate of 2 percent per annum over 20 years. Sino-Hydro was contracted to undertake the project, expected to cost about $1,5 billion.

On completion of the project, the plant will add 600 megawatts to the national grid, currently under pressure due to subdued production at the country's main power stations.