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Zesa insists on 30 percent tariff hike

By Africa Moyo

Zesa Holdings insists that a 30 percent tariff increase is critical to ensure the country continues to enjoy a steady supply of electricity, as there would be funds to repair the transmission and distribution network while also allowing the firm to purchase inputs such as coal and diesel whose prices have gone up.

ZESA Holdings group acting chief executive officer Engineer Patrick Chivaura
ZESA Holdings group acting chief executive officer Engineer Patrick Chivaura

This is despite the fact that Energy and Power Development Minister Dr Joram Gumbo is opposed to a tariff increase.

The country’s power utility says it has been battling to get a tariff increase for some time, but the Zimbabwe Energy Regulatory Authority (Zera) turned down one such application in 2016.

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At that time, Zesa had asked for a 49 percent tariff increase, which would have taken the tariff from USc9,86/kwh to USc14,69/kwh.

ZESA Holdings group acting chief executive officer Engineer Patrick Chivaura said the latest tariff increase request, was in tandem with the February 20 Monetary Policy Statement from the Reserve Bank of Zimbabwe (RBZ).

“We want to review those tariffs in accordance with the Monetary Policy Statement that was made, which brought a dimension of 1;2,5 (rate of RTGS dollars compared to US dollars),” Eng Chivaura.

“So it’s not an increase in tariff as such, but we do have inputs like coal, inputs like diesel; those have gone up significantly.

“We are not enjoying rebate yet on diesel because we use a sizable volume of diesel at Hwange Power Station and at any other smaller power station, and because of that, we will review the tariff.”

Dr Gumbo said; “We don’t want to talk about tariff increases at the moment, we will disturb people. There are still some discussions currently underway.”

An application for a tariff increase was filed with Zera during the week ending March 16, 2019.

Asked what would happen if the tariff increase request was turned down, Eng Chivaura said: “If they turn it down, naturally that’s a loss to the organisation.

“We then have to cut back in what work we can do.

“Generally, what suffers is maintenance which you experience as blackout in your localities, lines collapsing, etcetera, because we can’t maintain them, we can’t maintain the switch gears, we can’t maintain transformers, and so on. That generally suffers.”

When Zera rejected Zesa’s tariff increase in 2016, the energy regulator’s board considered several parameters that included economic performance, Government efforts to improve the ease of doing business and reduce the cost of doing business, the need for utilities to improve efficiency levels as well as implementing cost cutting measures, amid indications that the firm was top-heavy, which gobbled a lot of money through salaries.

Zesa is understood to be losing up to 16 percent of power generated during the distribution and transmission process.

Experts argue that if Zesa was to explore avenues of reducing, if not eliminating the loss of energy, there would be no need for a tariff increase.

Eng Chivaura said they are addressing the inefficiencies but the process would take some time.

“We are addressing efficiencies; it’s not an overnight thing. In total, we lose 16 percent of generated power. To be exact, 4 percent (is lost during) transmission, and the balance would be distribution; some of it is technical losses and some of it is non-technical losses.

“Illegal connections are lumped in because what we generate we buy all of that but what we then sell, is different from what we buy,” said Eng Chivaura.

He explained that they are currently doing a “whole lot” in updating the distribution network, which is on the technical side. Zesa also believes that the massive project on prepaid meters, which is being managed “closely” has helped in minimising losses, as opportunities for using power for free have been diminished. The Chronicle