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Zimbabwe exporters object to latest forex electricity tariff

by Staff reporter
28 Oct 2022 at 06:23hrs | Views
THE Confederation of Zimbabwe Industries (CZI) has requested an urgent electricity tariff meeting between exporters, energy bodies and the Government to clarify several operational issues emanating from new power charges.

Exporters claim they were not consulted on the matter and question the rationale of splitting tariffs among exporting customers and foreign currency earners.

They also raise doubts about whether there would be guaranteed uninterrupted power supply under such an arrangement.

The energy regulator, Zera, has already granted the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) greenlight to charge exporters in foreign currency for electricity supplies and announced a separate tariff for other foreign currency earners.

With the new tariffs structure, exporting customers now pay an average tariff of USc12.21/kWh while that of other foreign currency earners has been pegged at USc10.63/kWh.

The power utility has also increased the local dollar tariff component for ordinary consumers effective October 14.

The increases for exporting customers such as mining and manufacturing firms and foreign currency earners are with effect from October 1.

However, in a virtual meeting convened for exporters yesterday by the industry lobby group, members deliberated on recent tariffs adjustments and raised objections to the latest framework. Rather, industry players said the tariffs are too steep and felt this will further strain their operations.

CZI president, Mr Kurai Matsheza, said they were not consulted on the adjustments hence the need for clarifications.

"There is an urgent need to engage ZETDC, Zera and the Reserve Bank of Zimbabwe (RBZ). We need to understand why there are two separate tariffs, is it fair? We need a uniform tariff structure," he said.

"To the best of my knowledge, as key stakeholders, CZI was not consulted on new tariffs. The whole process was done in the wrong way. The procedure is, ZETDC must request a review from Zera and Zera should then consult stakeholders and recommend appropriate tariffs. But that was never done."

Industrialist Dr Richard Dafana said at they were yet to hear of any exporting firm that has been billed based on the new tariff structure.

"As far as we are aware, ZETDC has not billed anyone using the tariffs. The October bills are supposed to indicate that," he said.

"However, ZETDC needs to clarify the impact of the new tariffs on its efficiency. Will there be uninterrupted power supply to our members or is it just a change in their billing system.

"In the short term I don't see any changes on load shedding. We need to escalate this matter with ZETDC, Zera and agree on a reasonable structure."

A representative of the Zimbabwe Textile Manufacturers Association, Mr Shadrek Muhoni, said the new tariffs would further subdue their operations as they have other obligations, which are paid in US dollars.

In July, Zesa Holdings raised power tariffs for exporters by nearly eight percent, saying the then prevailing rate had become unsustainable. The tariff adjustment, which took effect from August 1 saw exporters such as mining firms paying US10c, 63c per KwH from US9, 86c.

The 9,86c rate was below cost and hence Zesa said it has been failing to capacitate the utility to ensure the security of power supply and efficient service delivery.

The power utility said there has been unprecedented demand for power by mining firms who are racing to meet the US$12 billion target by 2023.

Over the years, exporters in various key productive sectors, especially mining, have offered to pay their electricity bills in foreign currency in exchange for ring-fenced power from Zesa to avoid crippling disruption to operations.

The power utility has admitted to having challenges in providing adequate power on the back of antiquated equipment and other operational hurdles.

In June, the country's platinum miners entered into a special arrangement with Zesa where the mines prepay the power utility's offshore creditors in exchange for guaranteed and uninterrupted electricity supply to boost the mineral's output.

Zimbabwe's major power plants have an installed capacity of 2 260MW but lately have seen generation capacity subdued at around 1 300MW with demand hovering at around 1 750MW.

Source - The Chronicle