Energy regulator rejects ZESA tariff increase proposals

Energy regulator rejects ZESA tariff increase proposals

HARARE, July 20 (The Source) – Zimbabwe’s energy regulator has rejected an application by power utility ZESA Holdings subsidiaries to increase tariffs by 50 percent, citing the need to keep charges low to boost industrial output.

Zimbabwe Power Company (ZPC) in January proposed a 22 percent increase in power costs from 5,06 cents per kilowatt hour  to 6,64 cents per kilowatt hour on sale to the distribution subsidiary, ZETDC. ZETDC is proposing to sell the power to consumers at 14,69 cents per kilowatt hour from 9,86 cents, an increase of 49 percent.

“After duly considering the tariff application the written and oral submissions from various consumer groups and stakeholders as well as facts and evidence provided by ZETDC, the ZERA Board on 14 July 2016 made a determination that the current tariff of 9.86c/kWh be retained for the year 2016,” Zimbabwe Energy Regulatory Authority board chairperson, Ester Khoza told a press conference on Wednesday.

Khoza added that the decision was driven by the need to support the government’s ease of doing business to improve utilities’ efficiency.

The ZESA units argued that the tariff increase would put Zimbabwe at par with regional peers Namibia which charges 14,21 cents per kilowatt hour and South Africa at 13, 45 cents.  Zambia charges power at 10,35 cents per KW/H and Botswana 9,74 cents.

But business organisations felt that the parastatals’ struggles were self-inflicted, and urged them to streamline operations and improve efficiencies to bring down costs before calling for a tariff increase.

It is estimated that close to 20 percent of the electricity generated is lost during transmission and distribution because of poor infrastructure.

The power utility is also owed up to $1 billion, with government departments accounting for the majority of the debt. The agriculture sector is said to have accumulated debts to the tune of $120 million.