Saturday 22 October 2022


WITH official and black market foreign currency exchange rates moving towards convergence, the Government is considering allowing customers to settle their electricity bills using either local currency or US dollars, Zimbabwe Energy Regulatory Authority (ZERA) chief executive officer, Mr Edington Mazambani, has said.

ZERA has also engaged mobile payment providers to activate a multi-currency function on their billing platforms to ensure customers willing to pay in foreign currency are able to do so.

ZESA began billing exporters in foreign currency on October 1.

“We are going to make it optional because the (exchange) rates are converging,” said Mr Mazambani.

Inflation and the exchange rate have been largely stable since the Government intensified efforts to rein in market indiscipline. Some of Government’s interventions include hiking benchmark interest rates to 200 percent, introducing gold coins to mop up excess liquidity, auditing invoices from suppliers to ensure value for money and maintaining a lid on money supply growth.

The foreign exchange rate premium has significantly declined since May from as much as 140 percent to between 5 percent and 15 percent.

On the black market, the greenback is trading between $750 and $800 against the US dollar and is pegged at $639 on the interbank market (or the willing-buyer, willing-seller rate).

The gap between the black market and willing-buyer, willing-seller rates has significantly narrowed to levels “consistent with regional and international norms”, according to the Reserve Bank of Zimbabwe.

“When one looks at costs involved in exchanging the US dollar for the Zimbabwe dollar, it does not really make economic sense given that the rates are almost converging,” Mr Carlos Tadya, a Harare-based economist said.

“That will give ZESA more latitude to raise more foreign currency to import power and for capital projects.”

Mr Mazambani said many local businesses were now trading in foreign currency “and it is only fair for such businesses to also pay their electricity in foreign currency to ensure the power utility generates sufficient revenue to import electricity”.

In June, the Government,  through Statutory Instrument 118A of 2022, allowed the use of foreign currencies for transactions as part of the measures to stabilise the economy.

In essence, the United States dollar shall remain in use for the period of the National Development Strategy 1, which covers the period 2021 to 2025.

On average, ZESA imports 300 MW from Mozambique and South Africa to augment local production, which presently stands at about 1 400 MW.

However, the commissioning of Unit 7 at the Hwange Thermal Power Station next month and the coming on line of Unit 8 within the first quarter of next year will add a cumulative 600MW to the grid, thereby significantly improving the country’s generation capacity.

The  Government has also since secured US$300 million from the Export-Import Bank of India for the refurbishment of old units 1 to 6.

However, the expansion of the manufacturing and mining industries means capacity has to grow even further.

Last year, ZESA received 23 applications from smelting and mining companies, which will require 2 100 MW by 2025, ZESA executive chairperson, Dr Sydney Gata, said recently.

The backlog on new connections for domestic customers currently stands at about 350 000 units. Sunday Mail


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