More pain for Zim industry

LIVINGSTONE MARUFU

Industry should brace for more pain as the government is pushing for another power tariff increase amid fears that this could trigger a rise in prices.

The development comes after the industry, which was seeking government’s intervention on umbrella US$ billing, was told to embrace it and expect a cost reflective tariff.

Confederation of Zimbabwe Industries (CZI) president Kurai Matsheza told Business Times that industry has no option but to increase prices according to tariff adjustments.

“We engaged the Energy and Power Development minister [Soda Zhemu] over the blanket US$ billing and his response was the billing was justified and the current power tariff was not cost reflective despite an increase to around US$0.12 per kWh from US$0.09/ kWh,” Matsheza said.

He said this would trigger price increases, as the businesses will pass on the cost to consumers to survive.

A month ago, a meeting between industry and ZESA on power billing in the US$ proved fruitless after the power utility rejected local companies’ proposals.

The Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a unit of ZESA Holdings, rejected a proposal to have the US$ bills to be matched to the proportion of forex sales.

However, ZETDC insisted on a blanket bill.

Matsheza said the ZETDC’s newly announced power tariffs of US12.21c/kWh for all exporters while other forex earners are paying US10.63c/kWh is not sustainable.

He said the industry wants ZESA US$ electricity billing to be matched to the proportion of foreign currency sales as businesses have different mixes of local currency and forex earnings.

Previously, most customers paid in Zimbabwe dollar, under a stepped billing system, which entailed that users paid tariffs in line with the amount of electricity used.

Only a few exporters or partial exporters, including miners, paid for electricity in forex.

The industry was concerned that the tariff for exporters was way above the regional average of US11.7c/ kWh, as per data from the Southern African Power Pool.

“ZETDC told us the billing in US$ for exporting companies and those who are generating US$ through local sales should pay 100% in forex.

We raised an issue to say these blanket groupings may not be ideal.

“Whilst we understand the need to raise US$, why didn’t they look at the individual customer and say to what extent do you generate US$ sales and bill accordingly,” Matsheza said.

He said if one is an exporter and exports at an extent of 50% that is what must be billed. Also, the local player that generates forex to the tune of 20% should be billed accordingly.

According to CZI, Zhemu said the sub-economic tariff had left ZESA in a crisis.

For years, ZESA Holdings said the price hike would ensure viability and sustainability of the power utility.

The power utility said this adjustment would go a long way in enabling the utility to carry out its mandate of delivering services to the public.