'High risk hampers energy investments'

HARARE - Zimbabwe's high country risk and perceived negative image is hampering investments in power generation projects, Energy ministry said.

For decades, the country’s energy sector has deteriorated, undermined by lack of investment, poor maintenance, low fiscal support and a huge debt burden, as well as high consumer default on electricity bills.

State-owned power utility Zimbabwe Electricity Supply Authority (Zesa) is owed an estimated $750 million in unpaid bills.

Consequently, chronic power outages are affecting both domestic and industrial consumers.

Partson Mbiriri, Energy ministry permanent secretary, yesterday told Parliament that Zimbabwe’s energy sector had not realised a significant or meaningful investment for more than two decades.

“Besides our country risk remaining high, tariffs also remain too low to attract serious investors,” said Mbiriri, adding that’s the reason why investors granted licences way back were yet to inject funds in the power projects.

Under the current tariffs and regulatory environment, private sector penetration into electricity generation has remained unfeasible as Zesa is currently charging two cents per kilowatt for pre-paid consumers, compared to a regional average of 12 cents.

“Electricity tariffs across the Sadc countries differ considerably. In order to increase trade in power, countries need to achieve greater price parity. For example Eskom, the South African utility, is increasing prices by 25,8 percent per annum, raising Eskom’s average tariff to 15,6 cents per kWh,” Frost & Sullivan’s analyst Vincent Maposa recently said.

“Contrast this with Zesa, which is expected to be a net importer of electricity for the next five to seven years, and is currently selling electricity to domestic consumers at an average price of 7,5 cents per kWh. They need to effect price increases similar to those of Eskom’s, in order to enhance their ability to import power.”

On the progress of prepaid meter installation, Mbiriri said about 70 000 prepaid meters — 14 percent of the total — had been installed.

“The slow implementation is attributable to the financial constraints to pay the contractors,” he said.

“In an effort to raise $30 million to fund the programme, Zimbabwe Electricity Transmission and Distribution Company (ZETDC) last year went into the market through Infrastructure Development Bank of Zimbabwe, but only managed to raise $17,5 million and additional money to effectively cover the programme is still required.” - John Kachembere

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