Zimbabwean Private Sector Opt For Increased Power Tariff
…to save power supply crises hitting the country
The organised private sector in Zimbabwe, led by the Zimbabwean Chamber of Commerce (ZNCC), has agreed to pay a cost-reflective power tariff of up to the equivalent of US$0,14 per kilowatt-hour to guarantee constant supply of electricity in the county.
The nod from the organised private sector comes on the heels of similar calls by the industry at the recently ended Confederation of Zimbabwe Industries (CZI) 2019 Conference that requested a power tariff hike as part of strategies to address power crisis the country faces.
Currently, a kilowatt-hour is costing 9.68 Zimbabwe cents, roughly the equivalent of US$0,01, a scenario that has caused the state entity to operate at a gross loss. Speaking to Herald yesterday in the state capital, the Zimbabwe National Chamber of Commerce (ZNCC) chairperson Mike Kamungeremu, said that running a business on generators was highly unsustainable and said the private sector could do everything necessary to normalise power supply.
The chamber chief bemoaned instances where the power utility (ZESA) was importing electricity at higher prices only to be consumed at a lower price locally.
“Industry is okay with tariff increase even the US$0,14 per kilowatt-hour. We need it because we need a constant supply of power. Our expectation is if the tariffs go up we have guaranteed the supply of power. We have come to this position because what we cannot afford is to continue operating on generators. We need electricity; it remains the cheapest form of power.
So, what I can say is that even if the tariff is increased, it will still be way cheaper than operating on generators.
“We cannot continue operating on generators as indicated. If you run your business using your generators, you will be using US$0,30-US$0,40 per kilowatt-hour. There are some businesses right now which run very big plants, they cannot use generators or solar — for those ones, they need power and for that to happen the tariff must go up,” he said.
He explained further that at the moment electricity is costing $0,0968 per kilowatt-hour which translates to about a cent in US dollar terms, regretting however that the same power is being imported at US$0,04, the cheapest, and up to US$0,12 per kilowatt-hour and as a business we know ZESA cannot sustain such.
Deputy Minister of Energy and Power Development Magna Mudyiwa, said the government was seriously concerned with the current electricity pricing structure, which has been rendered ineffective by recent policy measures.
She lamented over commercial farm owners and industry reluctance when it comes to electricity bill settlements. “The Ministry is seeking an interim bridging funding package to rescue ZESA from liquidity constraints while a tariff review is being considered.
It is of concern that our tariff has gone below 1c per kilowatt-hour. I, therefore, encourage the industry and private sector to consider paying cost-reflective tariffs. Profits are good but for the utility to remain operational, it has to service its debts, procure resources and maintain equipment.
“I dream of a day that industry and commercial farms pay upfront for the electricity they use. Prepayment will assist ZESA to recover the current debt and avoid it altogether in the future,” said Mudyiwa.
According to her, the Zimbabwean Cabinet has approved an arrangement where ZETDC can ring-fence large-scale power consumers that generate foreign currency so that it may assist ZETDC to import power for use locally. The industry is encouraged to work with ZESA in this endeavour.