Zimbabwe’s power utility, ZESA, has announced a significant change to their billing system for domestic customers. In a move designed to address economic realities, ZESA will now be basing electricity tariffs on the US Dollar (USD) instead of the Zimbabwe Dollar (ZWL). This means that while you’ll still pay your bill in ZWL, the underlying cost will be determined by a USD benchmark. Let’s delve deeper into what this means for you and your electricity bill.

ZESA’s decision to switch to USD billing for domestic customers stems from a need to navigate Zimbabwe’s economic landscape. Here are two key reasons why this change might have been implemented:

• Curbing the Impact of Fluctuating Exchange Rates– Zimbabwe’s currency, the ZWL, has experienced periods of volatility. When ZESA bills in ZWL, fluctuations in the exchange rate can significantly impact their revenue stream. By pegging tariffs to the USD, a more stable currency, ZESA aims to ensure a more predictable income, allowing them to better plan for maintenance, upgrades, and future investments.
• Ensuring Sustainability of Electricity Services– If ZESA’s operational costs are primarily in USD (for things like spare parts, maintenance contracts, or fuel), billing solely in ZWL could create financial difficulties. The value of the ZWL might not keep pace with rising USD costs, making it challenging for ZESA to maintain service levels. By basing tariffs on USD, ZESA hopes to generate revenue that more accurately reflects their expenses, ensuring they can continue providing electricity to Zimbabwean households.
• Hwange loans-there was much fanfare when ZESA introduced Units 7 and 8 at Hwange with claims that this would alleviate the loadshedding we were going through. These units were installed by Chinese governments using a loan facility which requires payments to the tune of around US$35 million. This is a major cost which must be covered in USD. To be able to achieve this ZESA needs to charge a viable tariff.
• Power imports-ZESA currently imports about 200MW of electricity. That’s nowhere near enough to cover our peak demand of almost 2 000MW but it is sorely needed. The import costs is in USD so again it makes sense to charge a viable tariff.

How the USD Tariff Base works?

We have a detailed explanation on how ZESA’s tariffs work on this page. The short explanation is that you just take the cost of 300 units (kwH) i.e. US$50.35 and multiply using the prevailing interbank rate of the day e.g. if the rate is $20 000 ZWL the cost of purchasing 300 units for that particular day would be $1 007 000 ZWL. Obviously the rate keeps changing so this price will keep changing too. To see the current costs of buying say 300 units, visit our ZESA tariffs page. This page atomatically displays the costs buying electricity whenever the rate changes.

How will this impact you as a customer?

It might not seem like it but this will most likely have minimal effect on you. ZESA had been secretly doing this for a while now. You have already been paying a ZWL calculated using a USD base tariffs for weeks possibly months. ZESA has just now decided to be transparent about this change. This transparency means that we can now better help you determine how much you need to spend to get a given amount of units. The only possible drawback we can think of is that you will not have periods of very low tariffs due to ZESA taking too long to manually update their tariffs whenever the value of the ZWL plunges. The flip side is that you will not be paying exceedingly expensive tariffs whenver ZESA tries to correct a fall in the value of the ZWL against the US dollar.

What do I need to do as a ZESA customer?

Absolutely nothing. You can keep buying ZESA the same way you have always done through your chosen platform including ours. The complex calculations will be automatically handled behind the scenes at ZESA. You will not even notice the change.

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