Zim fails to secure investments in power

Rumbidzayi Zinyuke and Sifelani Tsiko
Zimbabwe’s electricity market has failed to attract sufficient private sector participation due to high costs and other challenges that have dogged the sector for decades.
The Zimbabwe Supply Authority, in a recent update of the country’s power supply situation said for power projects to be bankable, the tariff should be cost-reflective and the power off-taker should be creditworthy.

“In the case of Zimbabwe, we have been found wanting on both fronts. Significant progress has, however been on the tariff which is about 85 percent cost-reflective, but customers have done very badly on payment of electricity bills, as reflected in the $1 billion in outstanding bills,” the power utility said. “Primarily for these reasons, the Zimbabwean electricity market is not considered to be sufficiently vibrant to attract private sector participation.”

In June, Government developed a draft plan to guide the sequencing of Independent Power Producers (IPPs) amid revelations that only eight of 22 licensed IPPs were operational.

Energy and Power Development secretary Partson Mbiriri said the ministry would not give out licences until the IPPs proved they had the capacity to undertake the power generation project.

This comes on the back of increased concerns among consumers in Zimbabwe that tariffs were much higher compared to other countries in the region.
However, the Zimbabwe Energy Regulatory Authority (ZERA) maintains that despite challenges on the supply side of electricity, the energy tariff is in line with what is prevailing in the region.

Zimbabwe has an average end user tariff of 9.86 US cents per kilowatt hour (c/kWh) while Angola’s average end user tariff currently stands at 5,4c/kWh. In Malawi it stands at 9c/kWh, Namibia, 17c/kWh, and Zambia’s average end user tariff is 6c/kWh. Lesotho stands at 9,3c/kWh, Swaziland at 10,3c/kWh, Mozambique at 9c/kWh and South Africa (the municipalities) is at 11,7c/kWh, and that of the power utility Eskom is at 8c/kWh.

The Southern Africa Power Pool’s environmental and projects officer Johnson Maviya has also backed Zimbabwe’s tariff, saying countries factor in different costs to come up with tariffs.

“Most countries do a cost of service study that eventually guide them to calculate tariffs. Tariffs differ from country to country depending on the cost structures of utilities. Utilities also need to save for future investments and expansion. ZESA is currently doing Kariba South Extension and Hwange Power Extension. These projects need to be funded and where are the funds going to come from if they are not catered for in the tariffs?,” he said.

Since 2007 the region has been facing challenges in meeting its energy requirements, forcing most SADC member states to implement demand-side management policies such as load shedding. Maviya said most SADC countries have been implementing Demand Side Management (DSM ) programes to reduce demand and increase efficiency.

He said the programmes also include replacement of incandescent bulbs and replacing them with Compact Florescent Lamps (CFLs) which consume between 11 and 14 watts per bulb.

“All SADC countries have implemented this programme which has seen the region saving up to 3,285 MW from the introduction of CFLs alone. Other savings have been realised from the introduction of Solar water Heaters (SWH), commercial lighting such as solar powered street lighting, solar powered traffic lights, solar powered lights at parking bays and hot water load control. These together with CFLs have saved up to 4, 500 MW to date,” he said.

He added that the aim is to save up to 7,000MW by 2020 which can be regarded as a huge virtual power station.

March 2016
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