It surely never rains but pours in Zimbabwe as the economy continues to tumble. It is now known that fuel prices and mobile service tariffs are being hiked regularly nowadays. The latest entity to join that set is the power utility ZESA. At the beginning of August ZESA abandoned the flat rate approach and adopted what they titled the stepped tariffs approach. This was going to effectively reward low power consumers and punish heavy consumers. I penned an article explaining that new framework and quite frankly, for the most part, the new tariffs seemed relatively reasonable. However, that is not going to be the case anymore as ZESA has just introduced a new set of tariffs and conditions.
A Bit Of Background
ZESA had been sternly told not to hike their tariffs for years leading up to the beginning of August last year. They had countless times applied for upward reviews of tariffs but they had been dissuaded by the energy ministry. The power utility has been ailing for quite a long time now with lots of issues requiring attention. ZESA is owed more than a billion US dollars which has hampered its efforts to operate optimally. There are serious lags in repairs and maintenance works that have only made the situation worse. The power utility company also has debts it owes to Eskom in SA and Hidroelectrica de Cahora Bassa (HCB) in Mozambique. Working agreements have since been reached with these two entities towards the repayments plans for the debts and that has unlocked a combined 500 MW into the local grid. That has, to some extent, improved electricity availability in most parts of the country. In spite of this, the power utility company has still been struggling with foreign currency shortages a challenge they recently highlighted as their major impediment. As much as ZESA is battling a load of problems who would have thought they would come up with these alarming tariffs hikes?
A Look At The Latest Tariff Hikes
So after years of being disallowed from hiking tariffs, it seems the story has changed now as ZESA has now been authorized to enact fresh tariff hikes. I recall recently that there was a nationwide maintenance process that ZESA did and it probably now makes sense why they did so. Not only have they hiked the tariffs but they have also announced that from here on out tariffs shall be reviewed on a monthly basis. This shall be so in order to factor in changes in inflation. With how inflationary the operating environment is it simply means electricity tariffs will now most likely be hiked every month. Let us look at the details of the new tariff structure:
The stepped tariff structure still remains; only that the tariffs have been hiked by very wide margins. I will just touch on tariffs pertaining to domestic users. When you purchase your first 50 units for the month, they are now charged at ZWL$0.41 per unit (up from ZWL$0.06). For 51 to 200 units, the rate is now ZWL$0.91 per unit (up from ZWL$0.30) and for anything above 200 units, the rate is now ZWL$3.87 per unit (up from ZWL$0.40). The first 50 units that used to be at charged at ZWL$0.06 (translating to ZWL$3) now costs ZWL$20.50 to buy – ZWL$3 to ZWL$20.50. In comparison, it means that 200 kWh or units that formerly cost ZWL$48 will now be costing ZWL$157. Do you know what is ironic in all this? The incomes of the majority of people have remained mostly stagnant. So one wonders what is going to happen since ZESA has hinted on the possibility of tariffs going up every month from now on.
As I write this article I am busy thinking about how the majority are going to manage with developments like these. For most people airtime and data are now out of reach. Most basic goods and services are also out of their reach and now electricity has been added to that list. Surely there is need for urgent action to be taken to address the fundamental aspects underlying this perpetual decline of the economy.
