Featured - Local - Top Stories - June 14, 2021

Inflation driving electricity tariffs hike

Government will review electricity tariffs in line with inflation and exchange rate movements until they reflect the cost of production.

Last month, Zimbabwe Electricity Supply Authority (ZESA) effected a 30 percent power tariff hike for its prepaid customers, with the cost of 200 unit used by many households rising from $870 to $1 127.

Minister of Energy and Power Development Minister Soda Zhemu said that there is need to review tariffs regularly so as to meet the envisioned provision of adequate power and sustainable electricity.

“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 service delivery,” Zhemu said.

He said charging sub-economic tariffs will result in a continued 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, the long term effect being failure to maintain the grid.

“We cannot guarantee the nation of cheap electricity when it is not sustainable,” said Zhemu.

Following the introduction of the tariff indexation formula that aligns power tariffs to movements in inflation and exchange rate, tariffs are supposed to be adjusted periodically each time inflation and exchange rate move by more than 10 percent.

“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 increases  will help improve the power’s utility’s viability and ensure operational stability of ZESA although not to the level expected,” he said.

Zimbabwe currently imports power from South Africa and Mozambique.

 

 

 

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