6 December 2012

Zimbabwe: Zesa Contests Supreme Court Ruling On Tariffs

Photo: Vanguard
Electricity pylons.

THE Zimbabwe Electricity Regulatory Authority and the Zimbabwe Electricity Transmission and Distribution Company have approached the Supreme Court challenging the nullification of the 31 percent power tariff increase approved last year.

ZERA and ZETDC contend that the decision by the Administrative Court would open a floodgate of litigation from various consumers who have been paying bills based on the illegal tariffs.

The two organisations argue that ZETDC would be bankrupt as a result of the ruling.

They seek an order allowing them to use the September 2011 tariff from the date of the Administrative Court judgment until the setting of a new tariff. The Administrative Court declared the tariff increase illegal on the basis that ZERA was not a properly constituted body when it approved the tariff hike.

That left Zesa Holdings in a dilemma on what tariff to use pending a fresh process of applying for authority to adjust the tariff.

Recently, ZETDC filed a fresh tariff increase application, which is yet to be determined.

Pending the determination of the application, ZERA has instituted appeal proceedings at the Supreme Court.

The Administrative Court quashed the September 2011 tariff increase by ZERA after captains of industry challenged its legality.

ZERA is responsible for approving electricity tariffs in Zimbabwe.

The Confederation of Zimbabwe Industries contested the new tariff on the basis that when it was approved, the ZERA board was not properly constituted as required by the law.

CZI, ZERA and ZETDC concurred that the tariff was indeed invalid.

This resulted in the Administrative Court president Mr Herbert Mandeya quashing the tariff.

Mr Mandeya gave ZERA three months to come up with a new tariff.

In the notice of appeal filed on November 14 by two law firms -- Pundu and Company and Muza and Nyapadi -- it is submitted that the Administrative Court failed to consider some public policy principles.

The decision, according to the lawyers, results in the failure to amortise electricity imports and local electricity supply, thereby compromising security of supply.

"The decision overlooks the fact that electricity bills were raised on the approved tariff which included Zimra's Value Added Tax and Rural Electrification Agency levies, to the extent that the reversal of the tariff resultantly leads to the reversal of the said charges and payments against consumers.

"The court erred and misdirected itself in setting aside the electricity tariff that was effected on September 1 2011, in that the respondent and its membership will be unjustly enriched in that the cost of electricity has already been passed to the consumer," read part of the notice of appeal.

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