It has been a while, months in fact, since we had a ZESA tariff hike. The last time there was a tariff adjustment was sometime in March. Back then the government was busy telling everyone that $1USD was equal to $25 ZWL (fun times). Now the rate has since more than doubled since with the rate standing around $83 ZWL per 1 USD. As a result ZESA are mulling a tariff adjustment that reflects this change in facts.
According to ZESA insiders, the company requires a tariff of around 10 US cents in order for them to break even. Currently, the company is making use of a stepped tariff system that sees customers paying up to about $4.61 ZWL per unit when they go above the 300 subsidised units. This highest tariff is about half of what ZESA is looking for. ZESA officials warned if their call for a tariff hike were not heeded there would be dire long term consequences.
The long-term impact would be that we will be unable to fix the grid from a maintenance point if we have natural failures of transformers or lines that are down due to age. You find that our capacity to respond quickly has been eroded.Zimbabwe Electricity Transmission and Distribution Company (ZETDC) acting managing director Lovemore Chinaka
A matter of tricky balancing act
As with everything the government is likely to find itself in a spot of bother here. On one hand they have to make sure that parastatals are not operating in ways that will make them make them massive losses. However, with the government just having achieved some sort of stability in the economy, a new dysfunctional equilibrium at least, they would be warry of upsetting the apple cart by hiking tariffs which would make civil servants cry fould and demand pay hikes fuelling inflation.
They have to do some tricky balancing act and from experience it will probably mean they will at least partially hike the tariffs to sate ZESA’s demands while striving not to upset their civil servants.
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