ZESA wants to hike tariffs to US$0.10 per unit

ZESA is at it again, their new minister who has been a massive disappointment to compared to his predecessor recently revealed that the state owned power utility is in the process of seeking a tariff increase. The remarks where revealed on state TV and in a Chronicle article that has mysteriously now been deleted.

“As you might be aware, we are importing power from outside the country especially during peak hours and more so during this time of the year in winter. Our power is imported at as high as US$0,24c per kilowatt-hour whereas we are selling that power from ZWL$07,67c per kilowatt/hour. In order for us to achieve what we are envisioning to provide adequate power and sustainable electricity, there is a need for tariffs to be reviewed.”

Energy Minister Soda Zhemu speaking on ZTV

According to our friends at Techzim, the now deleted Chronicle article had revealed that ZESA wanted the tariff to be 7.5 US cents per unit to 10 US cents per unit. I am not sure what exactly that means as currently ZESA uses a stepped tariff system with the tariff going up the more power you use.

Three government failures all rolled up in one

Naturally the government will not accept blame choosing to instead use the fact that they have to import power at increased cost as a justification for seeking a tariff hike. To casual observer they look rather blameless until you consider three things:

• There is government abetted corruption at the power utility when it comes to increasing power generation capacity. Over the past two decades, ZESA has had a massive demand gap with what they produce well below what the country needs. Efforts to change that have been undermined by high placed government officials who keep flouting corporate governance and tender rules. The government for example had a brilliant plan to build power plants that would have shaved off the power gap, but they awarded the tender to a convicted fraudster with a briefcase solar company. He predictably failed to deliver. The planned Batoka remains nothing but talk.
• Government officials and organisations continue to be some of the biggest defaulters when it comes to paying for power. When the current prepaid system was introduced people were told that it would improve revenue collection and see an end to load shedding. That hasn’t happened. Well placed government officials and entities continue to drag us all down.
• The government’s official exchange rate is now basically fixed and hasn’t budged in months creating the fiction that things are OK even though the informal rate has moved from around 100 ZWL to over 130 ZWL ever since the auction began. To maintain parity without moving the rate, the government is seeking an increase in tariffs.