Industry warms up to Zesa tariff increase

MANUFACTURERS say an upward electricity tariff review to allow Zesa Holdings to fund generation projects, in the face of rolling power shortages of up to 10 hours a day in some parts of the country, has become long overdue as the current US$0.03 per kilowatt hour is rediculous.

Power outages have adversely impacted on the productivity of some companies especially in the Msasa industrial area of Harare.

Zesa released a statement recently saying declining water levels at Kariba South and a shortage of coal would result in load shedding.

Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe told  our sister paper the Herald last night that in some areas, the impact of power outages has been better while it has “been pretty bad” in other areas.

“Some areas have lost production time that is equal to two days and we are hoping that authorities will try to come up with a strategy that spares industry. They can cut electricity elsewhere not the manufacturing sector because that will have an impact on the economy. While we are still to get a full report on the impact of power outages, Msasa has been adversely affected,” said Mr Jabangwe.

Zimbabwe National Chamber of Commerce (ZNCC) president Dr Divine Ndhlukula also said the impact of power outages “has been negative” on industry.

Asked if the average tariff which was previously US$0.0986 per kilowatt hour, and now in RTGS$, both CZI and ZNCC leaders conceded it was time for an upward review of the tariff.  

Said Mr Jabangwe: “I think the tariff probably now needs to reviewed because even if you look at it against the interbank rate, the tariff has now come down from the average tariff of US$0.0986 to just over US$0.03. 

“We have always said we want it to be around US$0.05 or US$0.06 but it is now way below that. So, clearly a review of the tariff is necessary otherwise we won’t have electricity, we won’t have water. What we are just worried with is that the review should not make us uncompetitive.” 

Dr Ndhlukula said “certainly power is now cheaper”. 

“When you convert the kind of money we are paying in RTGS$ compared to what we were paying in US dollars, Zesa is now cheaper. The kind of level (new tariff), I would lie but there is need to review the power tariff. It’s unfortunate that it would push up inflation. 

“So it’s a catch-22 but three is need to review the power tariff. The new tariff, if it was to come, should take into consideration affordability for some people and of course some cost recovery for Zesa to be able to import power,” said Dr Ndhlukula.

Eng Chivaura said it has also become imperative to raise the tariff in line with the interbank rate.

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

Zesa’s last tariff application by 49 percent in July 2016 was rejected by Zera.