ZESA seeks another tariff increase

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LIVINGSTONE MARUFU

ZIMBABWE’s power utility ZESA has approached the power regulator for a threefold increase in tariffs to ZWL$0.81 per kilowatt hour from the current ZWL$0.27 in an effort to reduce load shedding.

The bid for a review comes barely a month after the government increased
tariffs to ZWL$0.27 cents per kilowatt hour from ZWL$0.986 cents, the
first time it has done so since 2011.

Insiders say despite the review early this month, Zesa is still struggling to meet its operational costs due to the current high inflationary environment in the country.

Another dilemna is that the Kariba Dam which used to generate over 750MW is now generating only 180MW, leaving Zesa to rely on thermal power producers whose operating costs have risen sharply after coal producers started pegging the coal price to the US dollar via the interbank rate.

Bernard Chizengeya, the Business Performance Manager of the Zimbabwe Power Company (ZPC) told Business Times that it was time for the government to review electricity tariffs to help the ZPC, the generating unit of Zesa, to operate efficiently.

“The ZWL$0.27/ kWh tariff is not good enough to sustain operations as
we continue to face the same operational problems we faced when we
were still at ZWL$0.0986/kWh,” Chizengeya said.

“When the current tariffs are rated against the US dollar,
we are essentially providing a service for “free” as we are charging
US$0.03/kWh. To be operational we should increase the tariff to around
ZWL$0.81 kWh” Chizengeya added.

He said the tariff increase is one of the main ways to fund Zesa as this
will improve debt collections due to the fact that most people are
connected to prepaid metres.

Zesa is owed close to ZWL$1 billion by its customers, and as most
people are connected to prepaid metres, the more they buy prepaid electricity, the more debt Zesa collects as the debt is taken at source – from the electricity the debtors buy.

Currently, the country is facing crippling power outages of close to 18 hours due to low generation levels across all plants and imports.

Zimbabwe mainly relies on imports from Mozambique and South Africa
but due to foreign currency shortages, Zesa owes its regional suppliers US$73m, making the suppliers reluctant to continue with the supply.

Zimbabwe has the potential to generate close to 2000MW but the
country is currently only producing 650MW due to low water levels in the Kariba Dam and antiquated machinery at Hwange and other thermal stations.


Currently Kariba South, which has a capacity of 1050MW, is only allowed to generate 180MW due to a low water level which has dropped to 478 metres.

Chizengeya said the water levels are so low that Kariba can no longer
supply Harare with adequate power supply.

There is a looming danger that if the water level reach 475 metres, Kariba will close and wait for the rains.

Three other small thermal plants (which produce an average 120MW each) based in Bulawayo, Munyati and Harare, are occasionally utilised due to old age. The ZPC uses 80 per cent of coal produced by local firms for its thermal
power stations.

According to the Zimbabwe Energy Council, the government’s energy think tank, Zesa should charge cost reflective tariff which would woo investors to
invest in the power utility.