Zesa tariff hike looms for miners

ZESA Holdings is set to review tariffs for major consumers such as miners to improve generation and boost its capacity to import electricity to meet local demand.

In his 2023 national budget statement last week, Finance minister Mthuli Ncube said Zesa was incurring huge losses when supplying major consumers such as ferrochrome smelters.

"Government is gradually reviewing upwards electricity tariffs, with the ultimate goal of reaching a cost reflective tariff which should enable the power utility to improve generation and capacity to import in order to close the supply and demand gap," Ncube said.

"Some of the major consumers of electricity such as ferrochrome smelters have been paying sub-optional tariffs of US$0,067/kWh resulting in huge losses to the utility. In this regard the tariff for such consumers will be reviewed upwards and aligned with other consumers, thereby generating additional revenue for the utility to meet its external obligations, as well as capacity to import spares for maintenance. Furthermore, a viable tariff will also promote investment in the sector, especially independent power producers."

Speaking at an electricity survey meeting in Harare on Tuesday, Chamber of Mines president Collin Chibafa opposed the proposed tariff increase saying: "On the issue of electricity, as an industry we struggle to accept the justification of the pricing structure. If we look at the mining sector, we surrender 40% of our forex to the Reserve Bank (of Zimbabwe), but a local business when they bank their money they surrender 20%. Mining brings more foreign currency to the country, but paying more taxes is not good. Local entities also pay less electricity tariffs than the mining sector, which is also unfair, we call for uniform tariffs.

"Government is gradually reviewing upwards electricity tariffs, with the ultimate goal of reaching a cost reflective tariff which should enable the power utility to improve generation and capacity to import in order to close the supply and demand gap. Furthermore, a viable tariff will also promote investment in the sector, especially independent power producers."

Economist Prosper Chitambara supported government's proposed tariff increase.

"I think it's a good move, when we look at the price of our electricity compared with other countries, we are the least. We are actually cheaper. So there is a need to make sure that the pricing is really fully reflective for the costs, especially for the major consumers," Chitambara said.

The country has the capacity to generate about 2 240 megawatts (MW) of power, but is only producing 1 300MW, resulting in rolling power outages.