HomeBusiness DigestZesa to hike tariffs

Zesa to hike tariffs

Godfrey Marawanyika

THE Zimbabwe Electricity Supply Authority (Zesa) will increase tariffs again on all power usage which are expected to hit industry and the mining sector hard after an

earlier hike in October.

The hikes are in line with recommendations of Sad-elec, a South African energy consultancy firm which was hired to study Zesa’s tariff structure.

Unlike in the past when the tariff increases were phased over a period, this time the hikes will be one-off for industry and the mining sector.

In October Zesa increased tariffs by 18,9% citing a rise in postal services.

Zesa general manager for corporate affairs Obert Nyatanga confirmed that the hikes would be with effect from the beginning of the year.

He would however not be drawn into revealing the quantum of the hikes saying they were still subject to approval.

“There will be a tariff increase with effect from January 1. The increments will be a one-off hike for industry and the mining sectors,” he said.

“Only the agricultural sector and the residential sub-sector will have a gradual tariff hike. We decided to do this as a way of supporting agricultural production.”

Zesa has taken up tobacco contract farming to raise foreign currency for power imports and the expansion of its generation capacity.

Zesa needs US$40 million to repay China National Aero Technology Import Export Corporation for investments in power generation in the country.

Zesa has sponsored 3 900 hectares of Virginia tobacco planted by both A1 and A2 farmers across the country.

Currently, Zesa is charging between $37 and $44 a kilowatt.

Zesa hired Sad-elec for a tariff review study after the parastatal was forced to reduce a 400% hike it had implemented last year.

Sad-elec said the pricing study was being done to develop a framework for economic regulation of the electricity industry, which would cover power generation, transmission and distribution.

Analysts have said that the new increments by state-controlled monopolies such as Zesa and Tel*One could in the long term undermine efforts to bring down inflation.

Sad-elec has since recommended that Zesa be allowed to affect a tariff increase.

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