Govt blocks Zesa tariff increase

MUTARE - Plans by Zesa Holdings (Zesa) to increase tariffs ostensibly to cover import costs hit a brick wall after government ordered that it should first recover more than $1 billion it is owed by its customers and also plug loopholes that cause losses.

Vice President Emmerson Mnangagwa revealed that Cabinet placed Zesa’s tariff increase proposals on ice after discovering that the power utility was not only failing to recover $1 billion from debtors but was also losing nearly half of its electricity during transmission.

To finance power imports and its projects, Zesa had proposed to push electricity charges to 14,64c/kWh from 9,86c/kWh.

Speaking during a Confederations of Zimbabwe Industries (CZI)-organised tour of Mutare industries on Thursday, Mnangagwa said government deferred the request to approve an increase in electricity charges to prevent the State-run institution from covering up its failures in managing its debtors on the nation.

“Zesa is owed $1 billion by the public, now they cannot then compensate the $1 billion they are failing to collect by increasing tariffs.

“We are also informed that Zesa loses about 40 percent of electricity through transmission and distribution inefficiencies, those are the areas they must attend to,” Mnangagwa said.

He added that when Zesa’s tariff increase proposals were brought to Cabinet, the matter was deferred to allow the parastatal to first improve its operations and fully justify the need for the increase.

“We discovered that there are some things Zesa can do in generation and transmission.

“Zesa is owed $1 billion by customers. So, something is wrong somewhere. We would want Zesa to address that. We cannot resolve it by hiking tariffs,” VP Mnangagwa said to applause by captains of industries who are already crying foul over the huge costs of doing business in the country.

“We would want our energy to be competitive…we would want our economic drivers to be competitive to support industry to grow,” he said.

Energy minister Samuel Undenge said the country and the region were suffering an acute energy shortage due to years of underinvestment in the critical sector.

“There was underinvestment in the energy sector,” Undenge said, noting that even warnings that the energy crisis would bite around 2008 were never heeded. 

Undenge, however, said they are now looking at both improving their operational efficiencies and spearheading a huge investment drive into hydro, thermal and solar electricity generation capabilities.

He said construction of the Batoka Gorge project to be jointly built and operated by Zimbabwe and Zambia is expected to commence beginning of next year with feasibility studies expected to be done in two months’ time.

Undenge asserted that the process will then kick-in between July and December with construction expected to begin in 2017.

“It will give us 2 400 megawatts to be shared equally between the two countries,” he said.

He added that the current expansion of the Kariba project was expected to add another 300 megawatts, with two Hwange thermal power plants expected to add another 600 megawatts.

The Gwayi project would also add another 600 megawatts, Binga’s Lusulu project another 600 megawatts and three solar projects in Matabeleland will be expected to generate a further 300 megawatts.

The energy minister also said they have since granted a tender for a 30-megawatt hydro power plant on Gairezi River in Nyanga.

Comments (1)

Zesa should slash electricity allowance to its employees which are easily abused. Besides, other employee benefits are outrageous considering the operational inefficiences. Get your house in order ZESA.

Timothy - 3 April 2016

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