News / National
'Our electricity tariffs are too low'
23 May 2021 at 07:24hrs | Views
Dr David Madzikanda was appointed board chairperson of the Zimbabwe Energy Regulatory Authority (Zera) in January this year. His team was immediately tasked with facilitating the country's access to modern energy technologies, as well as promote clean energy sources.
The Sunday Mail's HARMONY AGERE recently spoke to him about developments in the energy sector.
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Q: As a board, how satisfied are you with the progress you have made so far in fulfilling your mandate since coming into office?
A: We are satisfied with the progress we have made and the prospects of enhancing the energy sector into a robust and vibrant enabler that will catalyse the economy to greater and sustainable heights.
However, there is still more that we want to do for the sector.
Q: What major successes have you recorded insofar as strengthening regulation in the energy sector is concerned?
A: One of the promises we made to our principal when we came on board was to enhance a culture of stakeholder engagement.
As a board, we have engaged the majority of our stakeholders in the energy sector, including domestic and commercial consumers, local authorities, suppliers of energy, policy-makers and the media, among others.
The engagement exercise is still ongoing. From the engagements, we identified issues which needed urgent attention, including the fuel supply situation and licensing conditions, and we quickly resolved those issues.
We also identified some areas of convergence with the stakeholders such as the need for efficient use of energy, safety and quality issues in the sector.
We also reviewed the Zera strategy in line with a briefing from our principals, guided by the National Development Strategy 1 and the overarching country's Vision 2030, which seeks to transform the country into an upper middle-income nation.
You will note that energy will play a critical role in the envisaged economy by 2030.
The fuel supply situation has remained fairly stable and reliable and we hope to do the same for the electricity sector.
The Liquefied Petroleum Gas (LPG) sector requires urgent revamping and enhanced regulation given the flammability of the product and issues of quality and prices.
Remember, LPG is increasingly becoming the energy of choice for the majority for lighting, cooking and heating. So we need to strengthen that space.
Q: What is Zera's position on the proposed electricity tariff hike?
A: An inefficient power utility is a constraint to the economy. Zimbabwe requires a reliable, safe, affordable and sustainable power supply, and that can only be feasible if the tariff is correctly priced to ensure efficient operations.
At the moment, it is a fact that power tariffs are too low and not feasible to sustain the operations of the power utility.
So, should the power utility submit its application for a tariff review, we will certainly evaluate it mindful of the need to strike a balance between sustainability of the operations and the economic impact of tariff reviews on the consumers and the wider economy.
We will also ensure that there are significant improvements within the power sector.
Q: Only a few Independent Power Producers (IPPs) are operating out of the total number of those that were licensed. What measures have you put in place to ensure all licensed IPPs can start producing power?
A: The biggest challenge facing the licensed IPPs is their inability to attract project financing. Another issue is the creditworthiness of the main off-taker, which is the power utility.
This ties in very well with our earlier assertion that the tariff is too low such that it scares away potential investors in the sector.
On our part, we continue to urge IPPs to engage local financiers who have the capacity to fund these long-term projects.
Power sector is indeed a safe sector to invest in, given its assured returns.
We review the progress being made in the commissioning of these IPPs and provide advice wherever possible in an endeavour to fast-track the commissioning of IPPs.
Q: By how much is the country's electricity generation likely to increase over the next year?
A: Currently, our internal assured generation is 1 200 MW and we are expecting some IPPs to come on line in the region of 60 MW by early 2022.
The Hwange Power Station expansion project is set to inject about 300 MW into the system and that will ramp up our internal supply to about 1 600 MW against an average demand of 2 000 MW.
We have been assured that some projects, especially in the solar energy space, are likely to come on line earlier than expected and that will be positive news to us. So, in terms of security of supply, we are inching closer to supply stability.
The current capacity deficits are being met by imports.
Q: What should be done before the nation can start exploiting natural gas deposits in Lupane?
A: Ordinarily such projects should be driven by the power utility at national level as they will be informed by their system development plan.
However, the private sector can also come on board and drive the exploration and construction of gas-fired power plants.
Other countries in the region are doing it and we should also do it.
Q: How close are we to exploiting nuclear energy?
A: Nuclear is one robust and clean energy which is certainly worth pursuing.
As you might be aware, our principals approved the framework for cooperation with one of the leading giants in nuclear technology, Russia, to explore nuclear energy in the country.
On our part, having nuclear technology in our energy mix will go a long way in assuring the nation of security of supply.
We are endowed with the resource and surely we should be tapping and using it for our benefit. So, yes, it is an energy source that is worth investigating further.
Q: Can you outline the major developments in the LPG sub-sector over the last year?
A: The sector has matured over the last year as evidenced by the imports and consumption trends in the country.
The product is used mainly for cooking, heating and lighting. As the regulator, we intend to introduce a raft of new measures to ensure the sector is attractive to investors, safe and conforming to regulations, standards and codes.
Q: How much has the solar energy sector grown over the years?
A: Solar energy is one of the technologies that can be a game-changer.
As a country, we are endowed with so much solar irradiation to the extent that every part of the country can supply adequate energy from solar for economic purposes.
From an IPPs point of view, we have licensed 60 solar IPP projects with an installed capacity of 1 682,6 MW.
Four solar energy IPPs are under construction and are expected to generate 30,6 MW, while six are currently generating 6,34 MW mainly for own-use, while some are feeding into the national grid.
However, the prospects for the solar technology are bright. As a regulator, we are urging consumers to embrace the net metering programme and be part of the producers and consumers of power.
The Sunday Mail's HARMONY AGERE recently spoke to him about developments in the energy sector.
******
Q: As a board, how satisfied are you with the progress you have made so far in fulfilling your mandate since coming into office?
A: We are satisfied with the progress we have made and the prospects of enhancing the energy sector into a robust and vibrant enabler that will catalyse the economy to greater and sustainable heights.
However, there is still more that we want to do for the sector.
Q: What major successes have you recorded insofar as strengthening regulation in the energy sector is concerned?
A: One of the promises we made to our principal when we came on board was to enhance a culture of stakeholder engagement.
As a board, we have engaged the majority of our stakeholders in the energy sector, including domestic and commercial consumers, local authorities, suppliers of energy, policy-makers and the media, among others.
The engagement exercise is still ongoing. From the engagements, we identified issues which needed urgent attention, including the fuel supply situation and licensing conditions, and we quickly resolved those issues.
We also identified some areas of convergence with the stakeholders such as the need for efficient use of energy, safety and quality issues in the sector.
We also reviewed the Zera strategy in line with a briefing from our principals, guided by the National Development Strategy 1 and the overarching country's Vision 2030, which seeks to transform the country into an upper middle-income nation.
You will note that energy will play a critical role in the envisaged economy by 2030.
The fuel supply situation has remained fairly stable and reliable and we hope to do the same for the electricity sector.
The Liquefied Petroleum Gas (LPG) sector requires urgent revamping and enhanced regulation given the flammability of the product and issues of quality and prices.
Remember, LPG is increasingly becoming the energy of choice for the majority for lighting, cooking and heating. So we need to strengthen that space.
Q: What is Zera's position on the proposed electricity tariff hike?
A: An inefficient power utility is a constraint to the economy. Zimbabwe requires a reliable, safe, affordable and sustainable power supply, and that can only be feasible if the tariff is correctly priced to ensure efficient operations.
At the moment, it is a fact that power tariffs are too low and not feasible to sustain the operations of the power utility.
So, should the power utility submit its application for a tariff review, we will certainly evaluate it mindful of the need to strike a balance between sustainability of the operations and the economic impact of tariff reviews on the consumers and the wider economy.
We will also ensure that there are significant improvements within the power sector.
Q: Only a few Independent Power Producers (IPPs) are operating out of the total number of those that were licensed. What measures have you put in place to ensure all licensed IPPs can start producing power?
A: The biggest challenge facing the licensed IPPs is their inability to attract project financing. Another issue is the creditworthiness of the main off-taker, which is the power utility.
This ties in very well with our earlier assertion that the tariff is too low such that it scares away potential investors in the sector.
On our part, we continue to urge IPPs to engage local financiers who have the capacity to fund these long-term projects.
We review the progress being made in the commissioning of these IPPs and provide advice wherever possible in an endeavour to fast-track the commissioning of IPPs.
Q: By how much is the country's electricity generation likely to increase over the next year?
A: Currently, our internal assured generation is 1 200 MW and we are expecting some IPPs to come on line in the region of 60 MW by early 2022.
The Hwange Power Station expansion project is set to inject about 300 MW into the system and that will ramp up our internal supply to about 1 600 MW against an average demand of 2 000 MW.
We have been assured that some projects, especially in the solar energy space, are likely to come on line earlier than expected and that will be positive news to us. So, in terms of security of supply, we are inching closer to supply stability.
The current capacity deficits are being met by imports.
Q: What should be done before the nation can start exploiting natural gas deposits in Lupane?
A: Ordinarily such projects should be driven by the power utility at national level as they will be informed by their system development plan.
However, the private sector can also come on board and drive the exploration and construction of gas-fired power plants.
Other countries in the region are doing it and we should also do it.
Q: How close are we to exploiting nuclear energy?
A: Nuclear is one robust and clean energy which is certainly worth pursuing.
As you might be aware, our principals approved the framework for cooperation with one of the leading giants in nuclear technology, Russia, to explore nuclear energy in the country.
On our part, having nuclear technology in our energy mix will go a long way in assuring the nation of security of supply.
We are endowed with the resource and surely we should be tapping and using it for our benefit. So, yes, it is an energy source that is worth investigating further.
Q: Can you outline the major developments in the LPG sub-sector over the last year?
A: The sector has matured over the last year as evidenced by the imports and consumption trends in the country.
The product is used mainly for cooking, heating and lighting. As the regulator, we intend to introduce a raft of new measures to ensure the sector is attractive to investors, safe and conforming to regulations, standards and codes.
Q: How much has the solar energy sector grown over the years?
A: Solar energy is one of the technologies that can be a game-changer.
As a country, we are endowed with so much solar irradiation to the extent that every part of the country can supply adequate energy from solar for economic purposes.
From an IPPs point of view, we have licensed 60 solar IPP projects with an installed capacity of 1 682,6 MW.
Four solar energy IPPs are under construction and are expected to generate 30,6 MW, while six are currently generating 6,34 MW mainly for own-use, while some are feeding into the national grid.
However, the prospects for the solar technology are bright. As a regulator, we are urging consumers to embrace the net metering programme and be part of the producers and consumers of power.
Source - sundaymail
