Recently I discussed the latest developments regarding ZESA electricity tariffs which have since been increased by at least 200%. This came after roughly 2 months since the stepped tariffs framework was introduced by the power utility company. In this article I will touch on the rationale on such a decision especially considering how daunting it is for most people to afford such steep tariffs. The Acting CEO of ZESA Holdings, Engineer Patrick Chivaura, presented a speech during the WASHEN 2019 Conference held on Thursday last week. For those who might not know, WASHEN is an acronym for Water, Energy, Climate, Industry.
Engineer Chivaura’s Remarks
High Tariffs Better Than Power Unavailability
He said that tariffs for electricity will now be revised on a monthly basis starting this month of October. The revisions will be done factoring in the prevailing interbank exchange rates at the time. He pointed out that the thrust behind this step is to ensure that electricity is more available in the country. The overall working principle is that high tariffs are better off than unavailability of power. Engineer Chivaura said that working principle was informed by public sentiments that were brought to their and government’s attention. Further on, he highlighted that the current power crisis will linger on for the next 2 years after which the situation will have rectified itself. According to his remarks he indicated that after 2 years internal power generation will have been sorted out. Why does he say so?
Increased Capacity To Do Repair And Maintenance Works
He acknowledged that the daring stance by Cabinet to enact a framework where tariffs are cost-reflective is most welcome. He justified that by pointing out that such a framework enables the power utility company to do repair and maintenance works that have been long overdue. The engineer also alluded to how the tariffs prior to the review were far removed from the obtaining situation on the ground. Considering that ZESA is a huge company, he said the old tariffs were pushing the company down into the abyss.
Factoring In The Interbank Market Movements
He said that their upward review of tariffs has been approved. Giving reference to the fuel industry, Engineer Chivaura echoed how that fuel prices are now weekly and informed by interbank market movements. That approach is the same that they have adopted with the only difference being that they will be reviewing the tariffs monthly. He expressed confidence in that this arrangement will result in tangible and marked positive changes in the availability of power and service delivery.
An All-Encompassing Indexation Formula
Engineer Chivaura said that the review of tariffs will be arrived at by using a formula which factors in foreign currency aspects and movements regarding priority areas. This, he said, is something that they got approval from the government to do. In essence this means that if the float on foreign currency exchange spikes, electricity tariffs will also surge. This means the converse is true i.e. if the float on foreign currency exchange declines then the tariffs go down as well.
The Need For More Players In Power Services
Engineer Chivaura emphasised the need for more players to embark on the provision of power services. He dispelled the notion that ZESA is the sole provider of power services. He pointed out that industry and mines should be seen to take centre stage in power service provision. The other notion he dispelled is that the power utility company is opposed to the use of renewable energy sources. He said that renewable energy is most welcome as it actually complements the work that they are doing. He gave reference to the fact that most current renewable energy projects are small scale. They are needed and if more effort is put in their direction then their overall contribution to power availability will be significant.
Long Term Projections
Engineer Chivaura said that they are aiming at achieving a middle-income economy society by 2030. For that milestone to be achieved the country will need approximately 11500 MW of power. This requires concerted efforts and not just ZESA on its own he said. He pointed out that the power utility company can manage at most 6000 MW which basically means more players are needed.
Engineer Chivaura’s remarks did explain some of the issues at the core of the power crisis. I do, however, feel that some crucial elements are being ignored and exerting unbearable pressure on the vulnerable consumers. For instance, how can steep tariff hikes guarantee power availability when in essence tariff hikes lead to a decrease in consumer spending on power? The other aspect that always seems to be silent pertains to the money owed ZESA. It has been clearly reported that the power utility company is owed over US$1 billion (with government departments and local authorities accounting for over US$300 million of that). What exactly is being done to recover these monies? Overall, the measures being put in place to address the power crisis are boiling down to one thing – making life extremely hard for the ordinary Zimbabwean.