ENERGY and Power Development permanent secretary Patson Mbiriri has admitted that the electricity that will be produced at the controversial Dema Diesel Power Plant will be expensive, but justified the high cost saying the extortionate power tariffs will be blended with cheaper alternatives.
By Fidelity Mhlanga
This comes at a time there has been a wide outcry within and outside the Zimbabwe Power Company (ZPC) over the Dema deal which will result in the escalation of electricity charges. The Dema project was awarded to Sakunda Holdings’ Kuda Tagwirei who is partnering President Robert Mugabe’s in-law Derrick Ckikore.
Mbirirri said the 200 megawatt project controversially awarded to Sakunda despite the company not being involved in the tender process will be commissioned at the end of the month.
Dema will produce electricity at 15,04 c/kwh which is about four times more expensive than electricity generated at Kariba and two-and-a-half times more than Hwange Thermal Power Station, hence protests by some ZPC engineers who felt that the funds could have been channeled towards expanding existing stations.
Mbiriri, however, said the Dema costs would be diluted by cheaper electricity tariffs.
“You (are) getting an expensive tariff feed into the grid so you end up with a blended tariff,” he said.
Electricity generated at Kariba costs 4,11c/kWh, while that from Hwange Thermal Station costs 6,97c/kWh, making expansion projects far cheaper. The Dema deal, documents show, will have serious cash-flow implications on ZPC, hence its recent application to increase the tariff by 49%. This means Zesa’s struggling customers, already battling with huge bills and poor service delivery, are being asked to subsidise corrupt activities.
Meanwhile, Mbiriri said the Zimbabwe Electricity Supply Authority is struggling to retire the US$1 billion owed to it by domestic and commercial consumers.
Zesa whose lobby for tariff increase is now awaiting cabinet approval is battling to recover over US$1 billion from its customers with efforts to dispose it to the market through treasury bills is becoming futile.
The parastatal, which has been under spotlight after following revelations power expansion projects were inflated by over US$$500 million to cater for kickbacks and bribes, requires the funds to install prepaid meters to mitigate cash flow shortages.
Mbiriri said offloading the amount through treasury bills was proving to be difficult due to market forces.
“There are challenges in dealing with the US$1 billion debt. Unfortunately that’s the decision that the Ministry of Finance and Reserve Bank have to make. As we stand the paper (treasury bills) get on the market with a tenth of its value,” he said.