ELECTRICITY tariffs will continue to be reviewed in line with inflation and exchange rate movements until they reflect the cost of production, a Cabinet Minister has said.
Last month, Zesa effected a 30 percent power tariff hike for its prepaid customers, with the cost of the 200-unit package used by many households rising from $870 to $1 127.
The power utility has struggled to fund power imports, retain experienced staff and service its distribution infrastructure owing to sub-economic tariffs.
Energy and Power Development Minister Zhemu Soda told The Sunday Mail recently that cheap electricity was no longer guaranteed.
“In order for us to achieve what we are envisioning, that is to provide adequate power and sustainable electricity, there is a need for tariffs to be reviewed regularly,” said Minister Soda.
“It is also imperative that power be sold at cost reflective tariffs, that way the producer is able to continue to offer and improve on the service delivery.”
He said charging sub-economic tariffs will result in a continuous decline in both quantity and quality of service.
“Movements in the exchange rate and inflation will continue to threaten the power utility’s viability if tariffs are not raised,” said Minister Soda.
“The long term effect being failure to maintain the grid.
“We cannot guarantee the nation of cheap electricity when it is not sustainable.”
In October 2019, Government introduced a tariff indexation formula that aligns power tariffs to movements in inflation and the exchange rate.
Under the system, tariffs are supposed to be adjusted periodically each time inflation and exchange rates move by more than 10 percent.
“The current reviews are a result of an approval granted in October 2019 whereby the utility has to adjust the electricity tariff based on the movements in exchange rate and inflation.
“This was aimed at ensuring that tariffs reflect generation, import and distribution costs in order to prevent Zesa from returning to the days when it could not afford to buy coal, pay for imports, maintain its power stations or repair faults.
“The recent tariff increase will help improve the power utility’s viability and ensure operational stability of the Zesa although not to the level expected,” said Minister Soda.
Zesa currently imports power from South Africa and Mozambique.
Minister Soda said the Hwange Thermal Power Station, which is operating with four out of six generation units, was producing 440MW.
Two units at the power station are undergoing maintenance work.
“Kariba Power Station is producing almost 1 050 MW and if we add all that with generation from other small plants with capacities around 30 MW, we will have about 1500MW.
“As a country we need power generation above 1 500 MW in order to have stable electricity,” said the Minister.
The recent tariff adjustment will witness pre-paid consumers paying $ 2,25 per kWh for the first the 50 units, $ 4,51 for the next 150 units and $ 7,89 for the next 201-300 units.
Power units above 400 will now be charged at $13,50.
All prices include the Rural Electrification Levy of 6 percent.
Meanwhile, a fault at one of Hwange’s power generation units has been causing erratic power supply over the last two weeks.
The fault has resulted in load curtailment of about 200 MW during the evening peak period.