Power price increase inevitable: Minister…Lower increase margin possible

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Dr Undenge

Tinashe Makichi
Zimbabwe Energy and Power Development Minister Samuel Undenge says a power price increase in the country is unavoidable as the current subsidised tariff is unsustainable.This comes as the Zimbabwe Energy Regulatory Authority (Zera) turned down an electricity tariff hike proposed by Zesa Holdings in 2016 and ordered the power utility to maintain a rate of $0,0986 per kilowatt hour (kWh).
Zesa had proposed an upward tariff review of 49 percent, a move which would have seen consumers paying $0,1469 per kWh.
Dr Undenge said there is no going back on power tariff increase but there might be considerations for a downward review of the margin of increase to create a win-win situation between Zesa Holdings and its consumers.
“Zesa has operated for the past six years without a tariff increase unlike South Africa which adjusts its tariff annually. In our case it has remained fixed while the cost of operation has gone up,” he said in an interview with Business Weekly.
“We are operating with a sub-economic tariff and such a situation is not sustainable because we cannot import power only to sell it at a lower price,” he said.
“We are looking at coming up with a win-win situation, and of course the objective is to deliver power to consumers at affordable prices but of course we will need a tariff which can ensure that Zesa will continue to exist while providing service.”
“A tariff increase is inevitable but of course the extent can be re-looked at and come up with a different pricing regime or policy. But what is inevitable is the tariff increase,” he added.
Dr Undenge said authorities across the world used different methods to manage their power systems, and the tariff increase that Zimbabwe is considering would also help Zesa to finance its power generation projects.
Zesa has for the past six years been pressing Government to approve a tariff increase, but its pleas have been finding no takers. The power utility is owed more than $1 billion by consumers and has been struggling to collect the debt.
Dr Undenge further said the country experienced problems in the past including low power generation driven by low water levels at Lake Kariba.
But due to adequate rains received last season, the water levels have since risen to 56 percent. At the crunch time, Zambezi River Authority which administers Lake Kariba allocated 280 MW to Zimbabwe from a peak of 750MW.
With an improvement in water levels recently, Dr Undenge said ZRA has now allocated 380MW to Zimbabwe which is an increase of 100MW.
To fill the power deficit caused by low water levels, Government has had to import power from Eskom South Africa and Hydro-Cahora Bassa of Mozambique.
“Our power imports vary 0-400MW from Eskom and 0-100MW from HCB but with HCB we have a firm offer of 50MW,” said Dr Undenge.
Dr Undenge said that generation at Hwange Power Station had improved significantly with five units operating.
A sixth unit at Hwange would be coming on stream next month following a major overhaul.

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