Below-cost tariffs suffocate ZESA

HARARE-ZIMBABWE’S power utility ZESA Holdings has incurred a loss of US$140 million in the nine months to September, which is expected to widen to US$233 million by year end, an official has said.   

Last year the parastatal reported a loss of US$111.4 million.

“We are actually haemorrhaging as it is. We are selling power at below cost,” said ZESA chief executive Josh Chifamba on Monday while addressing a parliamentary committee on energy.

“The utility has not been awarded a tariff increase since 2011 and there has been no financial provision for the temporary emergency power plant and this has negatively affected the financial position of the utility.”

Last year, government contracted a local firm — Sakunda Energy — to set up an emergency diesel power generation plant from which ZESA would purchase electricity to augment its own erratic generation capacity.

The emergency plant, located at Dema, generates 100MW, which ZESA takes up at 15 cents per Kilowatt hour.

Parliamentarians, who visited the site last week, condemned the tariff as expensive compared to imports from South Africa’s Eskom and Mozambique’s Hydro Cahora Basa, which come in at an average of 9.42 cents per kilowatt hour.

ZESA subsidiary, ZETDC sales electricity at 9.86 cents per kilowatt hour.

Electricity sales to the domestic market are seen coming at US$727 million in the full year to December against an initial budget projection of US$1.2 billion.

So far, only US$549.6 million has been realised from local electricity sales in the nine months to September.

Zimbabwe’s power demand has fallen by nearly 40 percent over the past decade, the result of the decimation of industry over years of economic decline.

In May, Patson Mbiriri, permanent secretary in the Ministry of Energy and Power Development, told mining executives at a Chamber of Mines meeting that the country’s power demand has declined to about 1,400 megawatts, about 37 percent, from about 2,200 megawatts about in 1999.

ZESA, which employs 7,000 workers across its four subsidiaries, says employment costs are expected to take up US$155.4 million for the year compared to US$161.4 million last year. As at September 30, employment costs had taken up US$112.8 million.

Finance charges are seen at US$22.5 million against an initial budget of US$16 million. Last year finance costs amounted to US$20.2 million.

ZESA is itself owed more than US$1 billion by non-paying consumers of electricity. – The Source

November 2016
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