Blackouts cost productive sectors $2,89/kwh

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Tawanda Musarurwa

Productive sectors of the economy are losing on average $2, 89/kwh due to inefficient energy supply by the Zimbabwe Electricity Transmission and Distribution Company.

The cost of unserved energy (COUE) is the economic loss on a unit of energy not supplied due to unplanned outages.

ZETDC is a subsidiary of the Zimbabwe Electricity Supply Authority (ZESA).

The country’s sole power utility has been unable to provide consistent energy supplies, particularly to industry due to frequent breakdowns, high fault incidences, increased forced outages and voltage drops.

Management has attributed these factors largely to deferment of planned maintenance due to a ‘low tariff’ as well as mounting debts.

ZETDC’s payables (owed to creditors, lenders, employees, or Government) currently amount to $1, 13 billion, while loans stands at $327 million.

According to ZETDC tariffs and pricing manager Peggy Mhlanga the entity is failing to effectively contribute significantly to economic recovery.

“Failure to supply unused energy has an impact on industry. There is loss in production (and the over-time to make up for that lost production), damaged equipment and raw materials, foregone sales, backup cost- generators (about 40c/Wh).

“Around $2, 89 that is the overall cost for the various sectors currently,” she said.

Energy experts says investment in an electricity system to satisfy the energy needs of its customers must be justified by the reliability worth to the customers.

Hence, it is critical to have a good estimate of the cost of unserved energy so as to determine the appropriate level of investment in the system facilities during system planning.

According to official ZETDC stats, the agriculture sector has the highest cost of unserved energy at $6, 70.kwh, followed by services at $4, 84/kwh and manufacturing at $1, 42/kwh.

The local mining sector’s COUE stands at $1, 04/kwh.

Ms Mhlanga said the solution to ZETDC’s inefficient energy supply challenges is a cost-reflective tariff.

The drive to cost-reflective tariffs remains a top priority to the SADC member states as it is necessary for the industry to be viable,” she said, adding that Zimbabwe is at a disadvantage because of its use of the United States dollar.

“Average retail prices are low due to strengthening of the US dollar, for example countries using Rands see an increase in their tariff, but when converted to USD at a rate, the tariff appears low.”

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