Slash Zesa tariffs: Industry

THE Confederation of Zimbabwe Industries (CZI) wants the Zimbabwe Electricity Supply Authority to lower electricity tariffs to US6c per kilowatt hour and be at par with those prevailing in the region in an effort to make local goods more competitive.

This is despite Zesa’s latest proposal to hike power tariffs to US12, 8c/kWh from US9, 8c/kWh to enable the power utility to generate additional revenue of about US$200 million per year.

Industry has also called on Zesa not to have different tariffs for different sectors.

Zesa granted a US6,7 cents/kWh tariff to chrome producers and charges tariffs of around US9,83 cents/kWh to other consumers.

Industry believes that a lower tariff would make the local industry viable and competitive as electricity is one of the highest cost drivers in the local industry.

CZI president Sifelani Jabangwe told The Sunday Mail Business that reduction of power tariffs would make local goods competitive in other markets.

“If the country could reduce its electricity tariff for industry to the level of Zambia — around 6c/kWh — it will go a long way in improving its competitiveness as electricity is one of the key cost drivers of the manufacturing industry.

“We all need $0, 06/kWh because our products are struggling. RBZ has given us massive incentives but we can’t enjoy the incentives because our costs are so high.

“Ethiopia has managed to give their industry three cents per kilowatt hour, that’s why their leather is globally competitive.

“They are exporting all over the world, fastest growing leather sector and other sectors with them. Power is central and key and US12,8 cents/kWh will affect the industry,” said Mr Jabangwe.

Zesa is pushing for an increase in tariffs to guarantee power supply.

Last year, the Zimbabwe Energy Regulatory Authority (Zera) turned down an application by the Zimbabwe Electricity Transmission and Distribution Company seeking to hike energy tariffs by 49 percent.

Economist Dr Gift Mugano said Zimbabwe’s lack of competitiveness can be explained from two angles, that is, micro-economics and macro-economics.

He said, “With respect to the macroeconomics perspective, low productivity and the general business environment is weighing down our competitiveness and from the microeconomics perspective, we are undermined by high cost drivers like power, finance charges, water, taxes and levies.

“The average cost of producing electricity per unit (kWh) from the hydro and thermal power stations is high compared to other regional countries due to ageing equipment and inefficiencies in power distribution.

“The current cost of production is at