ZESA presses on with tariff hike
http://www.financialgazette.co.zw/
Thursday, 21 April 2011 12:18
Munyaradzi Mugowo, Business Editor
POWER generation and supply utility ZESA Holdings is pressing ahead with a
review of the current tariff structure, officials sources said, indicating
that tariffs could go up before the second half of the year. The State-run
power utility has not increased the price of electricity since February 2009
when the economy dollarised.
Through its transmission and distribution unit, ZESA had proposed to hike
tariffs to US$0,10 per kilowatt-hour this year from US$0,07.53 per unit, but
faced resistance from consumers, industry and government, who dreaded the
cost implications of the decision on households and industry.
The utility runs a special tariff of US$0,05.25 per kilowatt-hour for
business entities that consume at least 11 kilovolts.
In terms of the law, electricity tariff hikes should be a result of an
inclusive process involving broad-based stakeholder consultations. Eighty
percent of ZESA’s electricity is used to power households.
In a recent presentation to ratepayers and investors, the Zimbabwe
Electricity Transmission and Distribution Company (ZETDC), a subsidiary of
ZESA, said the present tariff structure was both sub-optimal and repulsive
to potential partners and independent power producers.
“ZETDC is not a charity,” an official with the utility said.
“We’re in business and we need to have a return on our assets. We’re pushing
for a rate of return of 8,51 percent on our assets.” The sources said the
tariff build-up should take into account costs and return on assets.
They further disclosed that the proposed tariff of US$0,10 per kilowatt-hour
was still concessional, marginally below both ZETDC’s break-even tariff rate
of US$0,11 per kilowatt-hour and the regional median of US$0,12.2 per
kilowatt-hour.
They explained that average cost of generation was about US$0,04.92 per
kilowatt-hour – US$0,02.39 for Kariba, which accounts for about 50 percent
of local power supply; US$0.06.04 for Hwange, which accounts for around 27
percent and US$0,14.14 for three small thermals that contribute only seven
percent of the load.
ZESA also imports an additional 36 percent of its total supply at a cost of
US$0,05.2 per kilowatt-hour.
Aggregating the generation costs for all the four composite sources of power
and adding a margin of US$0,02.33 would yield an average tariff rate of
US$0,10.07 per kilowatt-hour, just what ZESA is pressing for.
“We’ve also resuscitated our small thermals and they’re on the expensive
side,” an official said.
However, power from these plants is still without takers because of cost
issues.
ZESA had tabled an independent power purchase deal for its bulk power users
through a publicly-circulated invitation of expression of interest, under
which it sought to resuscitate the three coal-fired plants and dedicate
their output to interested users.