Zesa Holdings’ automatic hike of 19,02 percent for all
tariffs from Sunday is calculated from a formula that ensures continuation of
imports and operation of its stations.
Without the formula, set in October last year when the
regulator, the Zimbabwe Energy Regulatory Authority (ZERA), went through actual
costs when setting the initial tariff, consumers would find themselves even
longer in the dark each day.
In a statement yesterday, the acting managing director of
Zesa’s distribution arm, Engineer Ralph Katsande, said the tariff adjustment
was in accordance with the Tariff Award of October 2 last year, which approved
the implementation of a monthly tariff indexation formula which takes into
account the movement of macro-economic fundamentals such as the exchange rate
and inflation.
However, consumer subsidies remain. The larger subsidy is
on the first 50 kilowatt hours each month, the cost of which rise from 41c/kWh
to 49c/kWh. The new price means these first 50kWh now cost $24.50.
The next 150kWh rise in price from 91c a unit to $1,08 a
unit, giving a total for a month for this band of $162.
The two subsidies are worked on the basis that a careful
family can cope on 200kWh in a month and can survive on the basic 50kWh.
Buying the full 200kWh of subsidised electricity will now
cost just under $198, including the 6 percent rural levy, up from the $167 of
the last five months.
After the subsidy runs out, from 201kWh the tariff rises to
$4,61c/kWh from $3,87c/kWh.Zesa is relying largely on thermal power from Hwange
and imports from South Africa and Mozambique.
Kariba South is generating well below capacity because of
low water flows into Lake Kariba.
In Zesa’s energy mix, Kariba South power is normally the
cheapest. Hwange power is more expensive because it needs to buy coal, and the
cost of imported power is based on exchange rates.
Eskom, the South African utility, has announced it needs
large tariff rises as the tariffs it has been charging are the main cause of
the lack of maintenance and expansion of the South African system.
It was the same problem facing Zesa that gave rise to tariff
rises in October last year. But Zesa is also under orders to slash
administrative costs by uniting the five companies into which it was split into
a single entity and to upgrade its management.
Government wants to get as much power as possible to ensure
uninterrupted power supplies, particularly to the manufacturing, mining and
agriculture sectors.
Farmers want stable electricity supplies at this point to
irrigate their crops.
Zimbabwe Farmers’ Union president, Mr Wonder Chabikwa, said
the electricity tariff increase would need a further review of producer prices
for crops produced under irrigation.
“I hope Government will consider further reviewing the
producer price of our crops to meet production costs for farming to remain
profitable. If we don’t get an increase on producer price, farmers will be
operating at a loss. They need to recover their production costs, electricity
included,” said Mr Chabikwa.
His comments come on the back of Government’s Wednesday
announcement of a review of the maize producer price from $4 000 to $6 958 per
tonne.
Confederation of Zimbabwe Industries (CZI) past-president
Mr Sifelani Jabangwe said the electricity tariff increase should be in line
with inflation.
“If the tariff hike is above inflation, it will erode production
levels. We do not want a situation whereby industry will not afford to access
power due to high costs,” he said.
The formula used has produced an increase below inflation,
largely because the interbank exchange rate has been drifting down more slowly
than inflation.
Zimbabwe National Chamber of Commerce (ZNCC) chief
executive officer, Mr Christopher Mugaga, said the increment was long-overdue
considering the sub-optimal charges ZESA was charging.
“We all know the energy challenges haunting us as the
private sector. ZESA is undercapitalised and given this fact, the only way for
them to get out of this hole is to charge the right price.
“The 19,2 percent increment is way below the monthly
inflation figures. As business, we should be honest to each other and desist
from the blame game because consultations or no consultations, the tariffs had
to go up. We are always in touch with ZESA and ZERA and we know the prevailing
situation in the energy sector,” said Mr Mugaga.
Consumers are, as always, worried and for some on fixed
incomes it may well mean learning to live with less electricity each month.
A consumer, Ms Stella Jongwe, pointed out that along with
other price rises, the new Zesa tariff did require employers to review
salaries.
“While we appreciate that things are going up everyday, but
having another tariff hike will affect us. We are grappling with the increase
of bread and other basic commodities. Our employers should also come on board
and review our salaries accordingly. They are no longer sufficient to take us
through the whole month,” she said. Herald
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