Pure Simango, Staff Writer 
POWER tariffs in Zimbabwe are set to go up after Finance minister Mthuli Ncube said the government is pursuing a “cost recovery” plan for Zesa Holdings (Zesa) in 2022.
In the past, the government had limited power tariff hikes to restrain inflation, restricting Zesa’s cost recovery.
Currently, consumers pay between $2,12 per kWh and $12,74 per kWh, depending on their monthly usage.
Meanwhile, the state power utility has struggled to raise capital to revamp its infrastructure, with three of its stations operating at about 10 percent of installed capacity.
This has led to Zimbabwe experiencing serious power shortages, which have left business with operational losses and high costs.
“Zesa requires a tariff level that provides for maintenance of existing infrastructure, as well as investments in new capacity,” Finance minister Mthuli Ncube said in his 2022 national budget statement last week.
“While efforts are underway to improve on governance, the government’s trust is to achieve a cost recovery tariff in 2022, guided by the cost-of-service study findings by the World Bank.
“This is also in line with the cabinet decision to streamline subsidies,” he said.
This comes as the Zimbabwe National Chamber of Commerce (ZNCC) has backed Zesa’s call for a power tariff review.
In a recent submission to the Treasury, ZNCC blamed Zimbabwe’s power challenges on low tariffs, which it said has held back Zesa from retooling its thermal facilities and importing cost-effective technologies.
The business member organisation said with sustainable tariffs, the power utility could attract private investors.
“Zesa (must be allowed to) charge cost-reflective tariffs that attract independent power producers (IPPs) in line with the IPP policy,” ZNCC said.
The Zimbabwe Regulatory Authority (Zera) has also said sub-optimal power tariffs in the country are discouraging investors in the energy sector.
“The reason why we want cost-reflectivity is that they (Zesa) can be able to provide the service efficiently and ensure supply of energy.
“It also allows Zimbabwe as a country to be a destination of choice for potential investors in the energy sector, because potential investors in the sector look at the price to see if they can make a reasonable return and if it’s not cost-reflective, they do not come through,” Zera chief executive Edington Mazambani told a recent business conference.
“Non-cost reflective tariffs weaken the balance sheet of the utility and when people are coming into a country for investment, they look for the balance sheet of the utility and say… can we get into this country, at a utility, which is going to sell power at below optimum price? It’s not sustainable.”
newsdesk@fingaz.co.zw
