16 February 2018

Zimbabwe: Zesa Files for Tariff Increase, Again

THE Zimbabwe Energy Regulatory Authority (Zera) is currently reviewing a tariff increase application filed by the country's power utility, Zesa. This came out during a Zimbabwe Energy Council (ZEC) breakfast meeting in Harare yesterday. Zera technical director Engineer Misheck Siyakatshana said: "We have an application (for tariff review) at the moment and we are reviewing it." Pressed by The Herald Business to divulge details of the electricity tariff hike application, Eng Siyakatshana referred further questions to Zesa.

Zesa spokesperson Fullard Gwasira, could not be reached for comment on his phone. Mr Gwasira had also not responded to a text message sent to him.

But Zimbabwe Electricity Transmission and Distribution Company (ZETDC) transmission and distribution director, Eng Howard Choga, said 11c per kWh is their break even tariff. Zera takes about 45 days to review a tariff hike application.

The national power utility last got a tariff increase in 2011. At that point, the tariff was increased by 30 percent from USc7,50 per kilowatt hour to the current USc9,86 per kWh.

In 2015, Zesa filed a 48 percent tariff increase application that would have pushed the average tariff to about 14c per kWh. However, the application was thrown out mid-2016 by Zera, which advised the power utility to improve its efficiencies in the generation and distribution process.

Zera also argued that approving the 49 percent tariff hike request would have been tantamount to sabotaging Government efforts in reducing the ease of doing business programme.

Eng Siyakatshana said Zera has reviewed electricity tariff hike applications about four times since 2011, but rejected them for lack of merit.

"I would also like to mention here that we have reviewed the tariff; I think three or four times in the last few years. So the tariff is actually reviewed, the fact that there has been no increase does not mean that there has been no tariff review.

"The tariff is actually reviewed and the applicant is informed of our determination. The Act provides us to give a tariff that actually covers the cost of efficient operations.

"So it is only the efficient cost that we put a tariff for. If there are inefficient costs within an operator, we expect the licensee to deal with those costs," said Eng Siyakatshana. Zera carried out a study on Zesa's efficiencies in 2016 after rejecting Zesa's tariff hike increase.

The results of the study have since been prepared but will be publicised after being reviewed by Government. It is understood that the results of the study are now with the Ministry of Energy and Power Development. However, it is widely understood that about 20 percent of energy generated is wasted mainly due to near obsolete equipment.

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