The Sunday Mail
INDUSTRIALISTS have vowed to shoot down the proposed electricity tariff hike arguing that if approved, it will cripple the manufacturing sector’s exports.
The Zimbabwe Electricity Transmission and Distribution Company (ZETDC) recently wrote to the Zimbabwe Energy Regulatory Authority (Zera), requesting a tariff hike to raise funds “to procure 200MW capacity from emergency power sources” to cover the electricity shortfall occasioned by low water levels in Kariba Dam.
With a poor rainfall season forecast due to the ruthless effect of El Nino, serious power shortages are forecast going forward, hence ZETDC’s bid to raise funds to import power to ensure a steady supply of electricity and “avoid shrinking the economy”.
But industrialists expressed mixed views with some suggesting a tariff hike was “senseless” while others are amenable to a “reasonable” tariff increase that would ensure uninterrupted power supply.
Last week, National Bakers Association of Zimbabwe (NBAZ) president, Mr Givemore Mesoemvura told The Sunday Mail Business that existing tariffs are already high.
“There is no sense in what they are doing because we are using a strong currency which does not fluctuate. Considering that we are in a deflationary environment, I don’t see what motivates ZETDC to want to raise tariffs when in fact we have been complaining that the existing tariff is high.
“Instead of raising electricity tariffs, they should reduce their employees’ high salaries so as to fund whatever projects they want to embark on, not to burden industrialists who are already struggling,” said Mr Mesoemvura.
Zimbabwe National Chamber of Commerce (ZNCC) president, Mr Davison Norupiri welcomed the proposed tariff increase in the event that it would result in uninterrupted power supply.
“I think the tariff increase is justifiable when comparing with the region. However, each time Zesa has come up with an initiative, it has not quite benefitted industrialists.
“The last time they introduced pre-paid electricity meters, it was said they would result in a steady availability of electricity as long as you have paid but that is not the case. When industry pre-pays for electricity and do not get the power, it becomes a cost.
“So my view is that if this tariff increase is beneficial to electricity consumers, industry in particular, then it is fine but it should not go beyond the regional average of 14c per kilowatt hour (kWh) as that will have an impact on competitiveness, hence, affecting exports,” said Mr Norupiri.
He said any outrageous tariff increase would “completely wipe off” any hopes of exporting given that the turbulent rand is already giving South African products an edge over local products.
The country is battling to address competitiveness and Government has created the National Competitiveness Commission (NCC) to tackle competitiveness challenges for local manufacturers.
Industry and Commerce Minister Mike Bimha recently said NCC board members would be appointed soon.
Confederation of Zimbabwe Industries (CZI) president, Mr Busisa Moyo could not be reached for comment as he was not answering his mobile phone.
However, in an earlier interview, he had urged ZETDC to defer the tariff hike.
“We do not see how this (tariff increase) will solve the problem. It will exacerbate the pain on business.
“It will create more defaults and more non-performing loans, we advise against it,” Mr Moyo told The Sunday Mail Business earlier.
Consumer interest body, the Consumer Council of Zimbabwe (CCZ) executive director, Ms Rosemary Siyachitema slammed the proposed tariff hike, saying it will compound challenges faced by consumers.
It is understood that the new tariff proposed by ZETDC is between 12c per kWh and 16c per kWh.
No comment could be obtained from Zesa as the chief executive officer, Engineer Josh Chifamba was not picking calls.
Currently, Zesa is selling electricity at US9,86c per kWh, which is thought to be too low compared to regional averages of 14c per kWh.
The alleged low tariff has also been blamed for lack of investor appetite to venture into independent power production.
The African Development Bank noted in 2010 that the average effective electricity tariff in Africa was 14c per kWh against an average of 18c per kWh in production costs.
The proposed tariff increase comes in the wake of a recent report from CZI that shows that capacity in the manufacturing sector dropped to 34 percent this year from 36,6 percent a year ago.
The Zimbabwe Power Company (ZPC), a subsidiary of Zesa, is working on the expansion of Kariba South and Hwange Thermal Power Station which, when completed will result in 900MW being added to the national grid.
The projects are earmarked for completion beginning next year and 2018.
Experts also believe that there is rampant energy loss due to inefficient use.
The tariff increase is imminent after Energy and Power Development Minister Samuel Undenge urged Zesa to review the tariff upwards in a bid to raise more revenue which will be invested in power generation.
However, Minister Undenge cautioned that the electricity tariff adjustment must be “minimum”.
Government last reviewed electricity tariffs in 2012.
In 2013, Norconsult, a constultancy firm suggested a cost of at least 14c per kWh but concerns over generation efficiencies at thermal power stations have affected the actual cost of electricity.
Meanwhile, ZPC sent out 2,545,68GWh of energy against a target of 2,515,93GWh. Therefore the target was surpassed by 1,18 percent.
As at December 21, 2015; the country generated 987MW against an installed capacity of 2245MW and demand of 2200MW.
Hwange was generating 449MW, Kariba (468MW), Harare (30MW), Munyati (17MW), Bulawayo (23MW). –
