Electricity tariff review on the cards

GOVERNMENT is seriously considering reviewing electricity tariffs for the gold mining sector as that would aid in the reduction of operating costs, Finance Minister Patrick Chinamasa said.

"Review of electricity tariffs for the gold industry, from USc12.8/ KWh to the regional average of USc8/KWh, is also being considered with a view of aiding reduction of operating costs, " he said on Thursday.

"This will aid in attracting investment fo the recapitalisation of the mines operating below capacity and those closed and requiring resuscitation.

"The tariffs that will be paid by mining companies will be on a sliding scale, whereby they will increase or fall in line with fluctuations in commodity prices,kilowatt hour" he said.

However, in July the country's energy regulator -Zimbabwe Energy Regulatory Authority (ZERA) rejected an application by power utility ZESA Holdings subsidiaries to increase tariffs by 50 percent, citing the need to keep charges low to boost industrial output.

Zimbabwe Power Company (ZPC) in January proposed a 22 percent increase in power costs from 5,kilowatt-hour to 6,64 cents per kilowatt hour on sale to the distribution subsidiary, ZETDC.

ZETDC proposed to sell the power to consumers at 14,69 cents per kilowatt hour from 9,86 cents, an increase of 49 percent.

The ZESA units argued that the tariff increase would put Zimbabwe at par with regional peers Namibia which charges 14,21 cents per kilowatt hour and South Africa at 13, 45 cents.

Zambia charges power at 10,35 cents per KW/H and Botswana 9,74 cents.

But business organisations felt that the parastatals' struggles were self-inflicted, and urged them to streamline operations and improve efficiencies to bring down costs before calling for a tariff increase.

It is estimated that close to 20 percent of the electricity generated is lost during transmission and distribution because of poor infrastructure.