Power tariff increase on the cards

Government is considering hiking power tariffs, saying the decision by the Zimbabwe Energy Regulatory Authority (Zera) to refuse an increase ought to be revisited, Parliament heard.

Energy and Power Development Minister Samuel Undenge told Senators last Thursday that while Zera shot down a proposal by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) to review power tariffs, Government was of the view that the electricity providing firm had a genuine case for such a proposed hike.

He was responding to a question from Mashonaland Senator Damien Mumvuri (Zanu-PF) who sought to know if there would be constant supply of electricity given that Zesa Holdings had been denied the right to raise power tariffs.

"The ZETDC made an application for tariffs to be increased. They applied to Zera. After their tariff was considered, it was denied. Indeed, they had explained that they had a challenge in terms of the revenue that they collected and wanted it increased.

"Zera denied them, citing that other measures could be adopted. When we also considered it, we realised that the tariffs were low and it would be good for them to increase but those who are responsible for regulation said that when it comes to ease of doing business, it would be difficult for businesses as well as domestic consumers," said Minister Undenge.

"Indeed, there is a point that it is better to have expensive power than not to have it at all. So, this is an issue that we are seized with and we want to balance the revenue that we get from Zesa and ensure that there is a constant supply of electricity because there is nothing for free. We are working on the issue with the respective parastatals."

The current power tariff stands at 9.86 US cents per kilowatt hour after ZETDC had applied for a hike. ZETDC had proposed that the tariff be increased to USc 14.6 per kWh which was granted by ZERA but reduced to USc11.2 kWh mid-last year. The figure was later frozen after industry complained that the tariff was too high to sustain their operations.

The regional average is USc14 per kWh.

In a related matter, the Finance Bill which seeks to give legal effect on several fiscal measures announced by Finance and Economic Development Minister Patrick Chinamasa sailed through in the National Assembly on Thursday.

The Bill now awaits transmission to Senate.

Minister Chinamasa made adjustments to the initial budget estimates that he presented last year by allocating money to the Parliament of Zimbabwe and state universities.

He said there would be a provision of $50 000 on Constituency Development Fund.

Commenting on Chinese mega deals, Minister Chinamasa said they remained the best despite some conditions like the requirement that most raw materials should come from Beijing.

"The requirements of Chinese financial institutions are that when they lend us money, the contractor must be Chinese and the equipment must be sourced from China. We then remain with little, which we can use to source local materials. When you look at the Cost Benefit Analysis, we want power and the sooner we can start on those projects, the better and it is the only country where we can borrow from right now. So, we decided we take the loan, notwithstanding the restriction on where to source equipment and where to source the contractor. I must say, this is also the practice of most countries. They do not give you money to pay to companies from other countries," said Minister Chinamasa.