I recall the last time there was a somewhat significant electricity tariffs review was around May 2021. Along the way, I did notice there were some adjustments but not all were officially announced. I guess it is because they were so marginal; that you would barely notice. In light of the exchange rate movements over the months, electricity has remained affordable. A couple of months back I recall some chatter (in March 2022) around Zimbabwe Transmission and Distribution Company (ZETDC) seeking a 100 per cent hike. Whether or not that was true was not clear though logically it would have been understandable. Why? It is because for months electricity had become one of the most affordable basics. Let us discuss more as I drift towards the latest tariffs review.
Tariffs were due for review
This is a consensus held by many Zimbabweans, myself included. Just the other day some folks were joking about it on Twitter. Funny enough someone responded saying we should not give ZETDC hints. A day later, ZETDC announced tariffs have gone up; it was coincidental, I hope. This hike was a long time coming. To give you some perspective let me use my example.
I always purchase 200 units of electricity every month – more than enough. For the past 3 months, I was paying ZWL$1500 every month for electricity. That was giving me 218.6 units of electricity. Before those 3 months, I was paying ZWL$1200 and was still getting over 200 units. I guess you can see there were marginal hikes along the way that we’re not always announced.
Here is the central point though, that was unbelievably cheap for electricity. At the beginning of May, I bought 218.6 units for ZWL$1500. Using some parallel market rate; ZWL$1500 would get me around US$4. That is US$4 for 218.6 units of electricity; which is approximately US$0.02 per unit. This was against electricity generation and importation costs ranging from US$0.09 to US$0.11.
Other factors aside that did not make sense and many people wondered how ZETDC was running sustainably. That is why this latest tariff review should not come as a surprise since it was long overdue.
ZETDC’s Latest Electricity Update
On Sunday, the 15th of May 2022, ZETDC made the following announcement:
‘ZETDC wishes to advise its valued clients that Zimbabwe Energy Regulatory Authority (ZERA) has approved a tariff adjustment to restore the value of the tariff level of USc10.63 per kWh which was approved in 2019. This adjustment will go a long way in enabling the utility to carry out its mandate of delivering services to the public. The tariff review is with immediate effect from 15 May 2022’.
What This Means
This latest update is different from the usual ones. Take a look at this, ‘ZETDC wishes to advise its valued clients that Zimbabwe Energy Regulatory Authority (ZERA) has approved a tariff adjustment to restore the value of the tariff level of USc10.63 per kWh which was approved in 2019’. This is unusual because ZETDC updates usually entail new tariff bands prices (in ZWL$). This time around they mentioned a flat rate. Thus when you look at that latest update you ask yourself, ‘are we no longer using the stepped tariffs’? Stepped tariffs were introduced beginning in August 2019. Before that, there was a flat rate of US$0.14 per kWh. I tried getting clarification from ZETDC and ZERA but got no response. It is quite confusing because you cannot exactly tell which is which.
Which Is Which Then?
Let us suppose we just take it to mean we are back to a flat rate system. That would mean that 200 units now cost (200 multiplied by US$0.1063) which is US$21.26. Recall I told you that I was using roughly US$4 to get around 218.6 units. However, it is inaccurate to then compare because it was not a flat rate system. Do you get the sense of what I mean?
Stepped Tariffs Of 2019?
If we are to even consider the stepped tariffs system it is confusing again. When stepped tariffs were introduced in 2019, they were like this:
1 – 50 kWh (US$0.06 per kWh)
51 – 200 kWh (US$0.30 per kWh)
201+ kWh (US$0.40 per kWh)
If you are to assume that we are back to that it does not make sense. Why? It would mean that 200 units now cost US$48. Plus, do not forget that later on the stepped tariff bands were adjusted over time.
|1 – 50||1 – 50|
|51 – 200||51 – 100|
|201+||101 – 200|
|201 – 300|
|301 – 400|
This again makes the stepped tariffs from then incomparable to stepped tariffs now. Add in the exchange rate dynamics then you realize it is hard to deduce what the latest update means.
The bottom line is that ZETDC has indeed announced an electricity tariff hike but what exactly does it mean? This is the kind of thing I don’t understand about sketchy updates. Why not give a detailed update so that we are not left wondering? As it stands I am still to gotten any response from either ZETDC or ZERA. Maybe in due course, they will clarify what their latest communication means.