New Zimbabwe.com

ZESA seeks five percent tariff hike

STATE-WONED power utility ZESA is pushing for a five percent tariff increase in 2014, as consumer debt inches towards $1 billion with firms and individuals continuing to default on payments, its distribution subsidiary said on Wednesday.
ZESA was owed $818.1 million as of November 2013, up from the $785.1 million in the previous year.
Last year, ZESA cancelled an estimated $160 million in debt owed by households and farmers, following a government directive.
A presentation by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) at a stakeholder meeting held in Bulawayo showed that $276.6 million representing 34 percent of the debt is owed by domestic users, local authorities owe $147.9 million and miners have a debt of $140, 3 million.
The commercial sector owes $118 million, farmers $55.3 million, parastatals $23.5 million, industry $34.9 million while a debt of $5.5 million was unspecified.
ZETDC owes creditors $811.6 million and proposed a 5 percent tariff increase for 2014 to 10.36 cents/kWh from the current 9.86 cents/ kWh.
“Debt is almost equivalent to outstanding creditors but regardless of the debt accumulation a tariff increase is still required,” said the ZETDC.
The installation of prepaid meters should reduce the power utility’s exposure to debt, but it still faces challenges such as working capital shortage, antiquated machinery leading to frequent breakdowns and the high cost of doing business.
ZESA’s subsidiary responsible for generation, Zimbabwe Power Company is also pushing for a tariff increase, citing higher operating costs.
“Without a tariff increase to support the increasing input costs, the company might fail to generate at current or improved levels, as some maintenance works might be compromised,” said ZPC in its presentation.
“Due to aging plants, constant maintenance is required to maintain and improve production. The company is actively looking for capital for new generation projects and a cost reflective tariff is key to attract such capital.”
Meanwhile, the Zimbabwe Energy Regulatory Authority (ZERA) has said it will start consultations on ZPC’s tariff increase application on Thursday this week.
“The views and submissions of the stakeholder will be further analysed by ZERA and will inform the final tariff determination,” ZERA said in a statement on Wednesday.Advertisement