Zesa urged to cut down costs

HARARE - National power utility, Zesa Holdings (Zesa), has been told to bring its own costs under control before asking business and customers to pay increased tariffs.

Industry stakeholders yesterday said the looming 49 percent electricity tariff hike would condemn the country into an economic abyss.

“Zesa group needs to be restructured at all levels for cost containment and to match the reduced levels of electricity generation and the current economy,” the Confederation of Zimbabwe Industries (CZI), the Chamber of Mines Zimbabwe, Zimbabwe Farmers Union, Commercial Farmers Union and Zimbabwe Commercial Farmer’s Union said in a joint statement.

“At this stage, the economy of Zimbabwe cannot have cost increases in any of the inputs,” the industry bodies said.

The various economic stakeholders noted that significant cost reduction could be realised within the power utility without necessarily passing on the burden to cash-strapped consumers.

“With pre-payment system now supposedly working, banking halls can be dispensed of and head office overhead can be significantly reduced.

“Taking depreciation and Return on Assets (Roa) out of the revenue required, we find that payroll costs are 32 percent at Zimbabwe Power Company and 20 percent at ZETDC which we believe should be reduced like what is happening in other sectors in the economy,” industry players said.

This comes as the business member organisations recently met to discuss the proposed 49 percent upward review in the electricity tariff proposed by the state utility provider.

“It was clear that every sector represented at the meeting cannot afford any tariff increase, and in fact, some of the companies belonging to these sectors are struggling to pay electricity tariffs at current levels as evidenced by the 1 billion dollars owed to ZETDC by some consumers,” read part of the joint statement.

Industry also expressed concern over the decision taken by government to bring into the tariff equation the emergency power from diesel generation.

“This proposed 200 MW emergency power is coming at a huge cost to the economy. The investment by the economy in this proposed scheme can be better utilised if deployed to give permanent solutions to this energy crisis…

“All imported power is coming from utilities operating in weak currencies, and therefore we believe that the cost thereof should be low, not to cause a review of tariffs upwards,” said the industry bodies.

The ZETDC recently wrote to the Zimbabwe Energy Regulatory Authority (Zera), requesting a tariff hike to raise funds “to procure 200MW capacity from emergency power sources” to cover the electricity shortfall occasioned by low water levels in Kariba Dam.

The proposed tariff is between 12c per kWh and 16c per kWh. Currently, Zesa is selling electricity at 9,86c per kWh, which is thought to be too low compared to regional averages of 14c per kWh.

Zesa told to cut down costsCondemned: Industry sectors have jointly called upon Zesa to restructure before hiking electricity tariff.

Comments (6)

why should zesa compare tarrifs with the regioinal? we are paid not according to regional pay structures to tarrifs so zesa should cut down costs .

tee cee - 20 January 2016

journalists please do your homework well and report facts. I am currently living in Botswana. P100 will buy 132 units of electricity. In Zimbabwe US$10 buys 94 units. where is electricity cheaper then?

TRUTH - 21 January 2016

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Thomas Hushe - 21 January 2016

Tariffs is not a function of ability to pay. If the people cannot afford someone must subsidise. Tarrif is a function of input costs. This is how we lost it in agriculture. Forcing producer prices below production costs. Now hunger is looming.

Jonso - 22 January 2016

So called business groupings are used to cheap things that ruin the economy,for the past month or so you smiling there is no load shedding when zesa is importing @ 12 cents and giving you @ 9 cents.If one can not afford look for alternative cheap sources of power.Zesa and minister Undenge don't listen to these cry babies who drive the latest vehicle ranges but don't want to pay for electricity.

fundi - 25 January 2016

Price increase is good if we are not going to have load shedding. Also the increase should not be used for personal gains but for the betterment of our economy

gumbi - 26 January 2016

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