Chrome miners seek 3c Zesa tariff

Africa Moyo —
CHROME miners are pushing for a 3 cents per kilo Watt hour tariff to put them at par with their regional counterparts, in a move expected to ensure the miners compete effectively on the international market. 

The electricity tariff for local chrome miners is currently pegged at 8c per kWh, which is seen as too high compared to the regional average of 3c per kWh. In essence, the tariff for chrome miners is 1,86c cheaper than the average tariff for the rest of the consumers.

It is understood that Zimasco, which is part of China’s Sinosteel Corporation Limited, has already approached national power utility Zesa with the request for a downward variation.

Sources in the chrome industry say Zimasco sent the request but it is aware that it would be difficult to convince Zesa to lower the tariff considering that it was actually seeking a 49 percent tariff hike from the current average of 9,86c per kWh.

Zesa’s request was rejected by the Zimbabwe Energy Regulatory Authority (Zera) mid this year. Zera urged the power utility to consider improving distribution efficiencies and debt collection strategies before calling for a tariff increment.

Zimasco general manager — marketing and administration Ms Clara Sadomba declined to comment on the issue last week, only saying: “Many thanks for your questions.  Unfortunately Zimasco is unable to comment on this story”.

Zesa Holdings spokesman Mr Fullard Gwasira confirmed to The Sunday Mail Business last week that Zimasco has indeed approached the power utility requesting for a lower tariff and negotiations are ongoing.

“The Zimbabwe Electricity Transmission and Distribution Company (ZETDC) engages its customers on issues that affect them regarding the service provided by the utility.

“The power utility is currently engaging Zimasco on the issue of a win-win tariff for power consumed and no conclusive position has been reached as yet.

“Until such time that a conclusive position has been reached, we are not in a position to comment further,” said Mr Gwasira.

Zesa has urged miners and the rest of the manufacturing sector to operate at night when the tariff comes down to 4c per kWh due to more imports and less demand.

The Sunday Mail Business has since established that the need for a 3c per kWh tariff is no longer a Zimasco issue, but one that is held by all chrome miners.

Mr Bulisa Mbano, an advisory manager at Grant Thornton Zimbabwe, the firm superintending ZimAlloys’ judicial management, told The Sunday Mail Business last week that all players in chrome mining want a lower tariff.

It is thought that a 3c/ kWh for the sector would help the players effectively compete in the export market.

Said Mr Mbano: “It’s not just Zimasco, all chrome producers want that tariff to come down but we know it’s impossible, so we are looking for a win-win situation.

“The competition regionally is getting power at 3c (per kWh); that is where the 3c is coming from.

“It’s (need for a lower tariff) been on the cards for a long time and we are negotiating but as ZimAlloys we are profitable at the current rate.”

Chrome miners are especially keen on the lower tariff following Government’s decision mid last year to lift the four-year ban on raw chrome exports.

Last year, Mines and Mining Development Minister Walter Chidhakwa had hinted that Government would lobby Zesa to lower the power tariff for chrome miners to 6,7c/ kWh to stimulate investment in the sector.

However, Zesa is unwilling to play ball claiming that would make it difficult for it to pay for power imports.

The power utility has indicated that it is spending US$5 million per week on power imports from South Africa and Mozambique to augment locally generated electricity.

On Thursday last week, the country was generating 882MW against a national demand 1400MW, implying that the difference would be met through imports, and in some cases load shedding.

In the third quarter of 2016, the Zimbabwe Power Company — an investment vehicle in electricity generation — sent out 1,758.24GWh against a target of 1,935.10GWh, missing its target by 9,14 percent.

ZPC said it missed the target due to a number of factors “including cash flow challenges” and forced outages at Hwange because of tube leaks and ID fan challenges.

Load shedding is gradually hitting domestic consumers after a long period of uninterrupted power supply stretching back to Christmas last year.

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