Zesa tariffs still too low, says Soda

THE government has scoffed at MPs who this week raised concerns over continued electricity increases, saying the price of power is still too low if Zesa Holdings(Zesa) is to restore the tariff to where it was in March.

This comes after Zesa this week announced another whopping 50 percent increase in electricity tariffs, the third such hike in two months.

MPs had told Energy minister Zhemu Soda that the increase was set to bring more misery to long-suffering Zimbabweans.

MDC MP for Mutasa South Regai Tsunga was concerned that the increased Zesa tariff was disappointing and painful to consumers, both individuals and corporates.

"What policy measures are in place to ensure that the retail cost of energy is contained within manageable and sustainable levels so that electricity remains affordable to citizens taking into account the obtaining subdued levels of households' income that the generality of our citizens have to endure…and also noting the knock-on effect of such effects on the productive sector in this country; mining, agriculture, manufacturing and the economy in general?"

Tsunga added that there is no correlation between the pricing of energy and the incomes that the generality of people were earning. In response, Soda said the tariffs were too low.

"You will notice that for 300kwh, the average cost per unit is around $6,33 whereas the optimum level that is supposed to be achieved is around US$0,10 cents if we are to restore the tariff to where it was in March."

"I will also indicate that the country is importing power at an average of US$0,9 cents and for independent power producers who are also feeding onto the grid, the payment that is being done is US$0,9 cents. So, you will realise that there is a subsidy because the average cost per unit is US$0,6 cents whereas the country is importing power at US$0,9 cents.

In terms of policy… domestic consumers are subsidised," Zhemu said. "For agriculture, there is also a subsidy and the tariff which is currently obtained for agriculture is US$0,4 cents per kilowatt per hour. For industry, mining activities and some other commercial activities, it is at US$0,10 cents. I think it is not a question of being exorbitant, but the power utility has to be viable in terms of the cost that it is incurring in order to generate, transmit and distribute power."

He said the nation should brace for more increases in power tariffs. MDC MP Settlement Chikwinya questioned why Zesa would increase tariffs when the government was claiming that the local currency was stabilising.

"The supplementary then follows as power has increased three times in the past six weeks at a rate of 50 percent each time of increase. May you relate to this House the rhythm that justifies such an increment, considering a stable auction rate of our RTGS as it trades with the US dollar? How come you are saying the US dollar is being affected by inflation yet we are having a stable auction rate which has been around $81 for the past one-and-a-half months?"

Chikwinya also demanded a ministerial statement to address the issue of power tariffs increases.