27 November 2012

Zimbabwe: CZI Seeks Legal Advice On Zesa Tariff Reversal

THE Confederation of Zimbabwe Industries is seeking legal advice to enforce an Administrative Court order directing power utility Zesa Holdings to reverse the 31 percent electricity tariff increase effected in 2011.

CZI contested the power tariff hike arguing that the increase would seriously affect business and that they, as stakeholders, had not been consulted as required by law.

The Zimbabwe Electricity Transmission and Distribution Company, a subsidiary of Zesa Holdings, increased tariffs from US7,53c to US9,83c per kilowatt-hour.

But after losing the lawsuit the Zimbabwe Energy Regulatory Authority chairman Mr Canada Malunga told journalists that the outcome of the court case could plunge the country into crisis and reverse the gains Government has covered to enhance security of power supply.

The CZI, however, shot down the ZERA chairman's statement saying that it was unfounded.

"CZI would like to unequivocally state that the statement that points to CZI as responsible for the alleged potential crisis as a result of the court order is incorrect, and unfounded." The regulator also created the impression that CZI's legal challenge of the electricity tariffs may be an impediment to the private sector participation in the power sector.

Said CZI: "The statement has no basis on facts. CZI only took action on behalf of business following irresponsible action by authorities on a matter that had serious impact on business."

About 10 percent of industrial firms covered by CZI in its manufacturing survey report said power was the major constraint to the viability challenges they are facing.

CZI said that the legal challenge was before the courts for over a year before it was heard and ZERA should have rectified the "illegalities and irregularities" as stated in the court order, and prevented the current state of affairs.

While acknowledging the need for reliable power supply to the nation, CZI said, this should be affordable to business as not only reliable, but also affordable energy supply, which is a critical ingredient to economic development. CZI contends that efforts towards achieving reliable and affordable power supply should follow due process and the law.

"CZI strongly opposes piecemeal adjustment to tariff as this does not bring predictability and confidence that this country needs," it said.

The industrial body proposed that a cost of power supply study be done to come up with a viable and economic tariff for both the power supply service providers and consumers.

CZI said that ZERA should spend time and resources towards assisting the Zimbabwe Electricity Transmission and Distribution Company to recover the over US$400 million owed by consumers.

It contends that attempts by ZERA to approve any increase in electricity tariff without a clear debt recovery strategy and a cost of supply study was unjustified and unfair to customers who are paying for their electricity bills.

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