Private players to enter Zimbabwe's electricity retail market

Zimbabwe is set to open its electricity sector to private players who will be allowed to generate, transmit, and distribute power directly to households, especially in newly developed suburbs. This strategic shift aims to complement the efforts of the financially constrained Zimbabwe Electricity Supply Authority (ZESA) Holdings, which will retain its role as the sole regulator.

The move follows the Government's realisation that ZESA alone cannot keep pace with the rapid urban expansion and growing demand for electricity in what Energy and Power Development Minister July Moyo termed "dark cities".

Speaking during a National Energy Compact workshop in Harare last Wednesday, Minister Moyo confirmed that Cabinet had approved the involvement of private companies in electricity retailing.

"ZESA's investment might not be enough to take electricity to the households. So, we invite the private sector to say, is there an allowance for the private sector to now take over and be the retailer in those areas?" said Moyo.

"Our position, which Cabinet has already agreed to, is that we should invite the private sector."

The model is already being used in neighbouring countries such as Zambia, where private companies like Copperbelt Energy Company and North Western Energy Company play key roles in electricity transmission and distribution.

Zimbabwe's approach is expected to mirror this, enabling private entities to service new urban areas and offer electricity directly to consumers while ensuring national standards and pricing remain regulated by ZESA.

Minister Moyo also highlighted ongoing efforts to establish a cost-reflective tariff structure, a critical step in attracting private investment. A cost-reflective tariff ensures that electricity pricing accurately mirrors the real cost of production, transmission, distribution, and retail services.

"I want to see the percentage of our reflective tariff. If our reflective tariff is 16 cents, what is the share of generation? What is the share of transmission? What is the share of distribution?" he asked.

He emphasised the importance of transparency and clarity in tariff structures to build investor confidence in the sector.

"For the private sector to understand cost-reflective tariffs, it should not just be a cost-reflective tariff at the tail end — it must be cost-reflective at generation, transmission, distribution, and retail."

According to Minister Moyo, Zimbabwe has a growing base of private sector players with access to both local and international capital, and this capacity can be harnessed to stabilise electricity supply and support economic development.

Analysts say the move to liberalise parts of the energy sector is a bold but necessary reform that could ease pressure on ZESA and bring much-needed investment into power infrastructure.

With new suburbs mushrooming across the country and demand for energy surging, the Government hopes the involvement of private retailers will close the electricity access gap and improve service delivery in underserved communities.