The prevailing load shedding is a testament to how much the power utility company is struggling. Recently Advocate Fortune Chasi made a trip to SA in the hope of reaching an understanding with Eskom for the increment of power exports to Zimbabwe. Unfortunately, nothing materialized owing to the fact that ZESA still owes Eskom USD27 million dollars. Eskom has made it abundantly clear that the request for more power exports can only be considered after the clearing of all current arrears. Meanwhile, the local energy ministry is looking for an emergency budget fund to address ZESA’s financial woes. On the other hand, ZESA is also seeking the approval of a tariff review.
9-Fold Tariff Hike Being Pushed For
ZESA has indicated that a scenario where consumers pay 9.83 US cents per kilowatt hour, would help in aligning themselves with the ever-rising operating costs. The tariffs should be based on the interbank rate; a framework which they’re saying will best produce tariffs that are abreast with the current dynamics in the financial markets. What that means is that the 9.83 US cents will be converted to RTGS$ at the prevailing interbank rate. Currently, ZESA says that the present tariffs are such that consumers are paying below USD0.01 per kWh.
ZESA CEO, Patrick Chivaura said that the current tariffs essentially mean that people are getting electricity for free as it were. They are saying that this is highly unsustainable especially considering that the operation of the thermal power stations at Hwange has become very costly. An interesting to note is the 9.83 US cents proposal isn’t a tariff hike per se, that’s according to the ZESA CEO. He said that they are basically seeking for a reversion to 9.83 US cents, which is on old tariff from the dollarisation period.
They might call it a reversion but in reality, it’s a tariff hike because people are earning incomes and salaries in RTGS$. Mr Chivaura said that if they’re to review the 9.83 US cents upwards it would only be just a bit – still it’s just verbal jargon to mask the fact that already their proposal is a steep tariff hike. He also indicated that their proposal has already been submitted to the energy ministry.
Coal Prices Getting In The Mix
Coal prices have firmed at USD26.50 (but of course the RTGS$ equivalent is arrived at using the interbank rate). Zimbabwe Power Company (ZPC), a subsidiary of ZESA, gobbles up about 80% of the total coal produced locally. So this is really laying a huge financial burden on the power utility company. So that’s why ZESA is pushing for an upward review of tariffs in order to adequately factor in the cost element. The other expected outcome is to have a sound financial standing that’ll be favourable to prospective investors. The African Development Bank (AfDB) is echoing the same sentiments saying that an upward review of tariffs is crucial in achieving that financial soundness. Here’s a question, is the answer really in hiking tariffs?
ZESA is owed over USD1 billion with the biggest chunk of it being owed by government departments and local authorities. That amount is enough to sort out ZESA’s financial woes so why aren’t concerted efforts being pursued to recover it? Then from the latest AG’s report, it emerged that there’s various equipment that was ordered and paid for by ZESA yet was never delivered. What’s going to be done about all that? The reason why I’m asking these questions is that you can’t contemplate hiking tariffs for a populace that’s already struggling financially. After all, how does hiking tariffs immediately address the prevailing power shortages really?
There’s incessant load shedding and that means more and more people aren’t consuming as much or no electricity at all. How then will a tariff hike boost the financial standing of ZESA when it’s most definite people will turn to alternatives and consume less electricity even when it’s available? Frankly, I somehow understand ZESA’s plea to have cost-reflective tariffs but 9.83 US cents per kWh is no joke for the majority of Zimbabweans. The measures being implemented to address power issues must be many and concerted not placing more emphasis on tariff hikes at the expense of even bigger issues such as the lack of investment in energy sources.
How about solar energy, what’s being done about that? Surely with an intent focus on building solar farms, lots can be done to address the local power challenges. Again, there’s an issue of institutionalised corruption that’s rife in parastatals such as ZESA which must be addressed. Another issue is that of privatization of ZESA; that needs to be speeded up also. So in my humble opinion, a steep 9-fold tariff hike isn’t the best approach here – first things first!