Zesa to hike electricity tariffs

If the proposal of a five percent increase in electricity tariff by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) sails through, Zimbabweans would see the biggest hike in the cost of power in five years. 

ZETDC, a subsidiary of Zimbabwe’s power utility company Zimbabwe Electricity Supply Authority (Zesa), said a marginal increase in the tariff will be detrimental to its operations in the long-term.

The tariff hike request, the firm said, was meant to enable mobilisation of resources to fund plant and network maintenance backlog and correct distortions in the current tariff.

Zesa has justified the proposed hike, saying without a tariff increase to support the increasing input costs, the company might fail to generate electricity at current or improved levels, as some maintenance works might be compromised.

The company, which is facing consumer debt of almost $1 billion, said it was actively looking for capital for new generation projects and a cost reflective tariff is key to attract such capital.

Presently, Zesa charges a tariff of $9.86 per kilowatt hour and says this falls short of the cost of running business, which it pegged at $10.51/kwh. Zesa said it had in the past few years sought to revise tariffs, but the government would not approve such increases or would reduce the percentages.

In 2009, Zesa sought to increase tariffs to $9.83/kwh and the government initially approved this before reversing it to $7.53/kwh. In 2010, there was no tariff increase, while a $9.83/kwh raise was approved for 2011, the company said.

It added that there was no tariff change in 2012, while a 0.3% increase to $9.86/kwh was effected in 2013, meaning the company has been making losses since 2009. But it is very unlikely that Zimbabweans, who are still experiencing what has been described as the worst power crisis in years, would stomach an increase as massive as five percent. Business Day