Steve Hanke Says Mthuli Ncube Should Hike Electricity Tariffs Again

An American applied economist at the Johns Hopkins University in Baltimore, Maryland, Steve Hanke, has commended Zimbabwe’s Finance and Economic Development Minister Mthuli Ncube for hiking electricity tariffs.

Hanke, however, said that the new tariffs are not high enough and need to hiked again. Writing on Twitter, Hanke said:

Mthuli Ncube has announced price hikes for power of about 175%. Good move. But, not enough. To normalize and ensure reliable power, Zimbabwe’s electricity prices will have to increase by another 450% on top of the new prices. There is no such thing as a free lunch.

Ncube announced an upward adjustment to electricity tariffs during his Midterm Budget Review statement in Harare on Thursday. He said:

• The electricity tariff for Non-Exporting businesses be increased from an average of ZWL9.86c/kWh to an average of ZLW44c/kWh (approximately USc5/kWh);
• The electricity tariff for domestic consumers be increased from an average of ZWL9.86c/kWh to an average of ZWL27c/kWh (approximately USc3/kWh), which is subsidised;
• The electricity tariff for Agriculture consumers be increased from an average of ZWL9.86c/kWh to an average of ZWL27c/kWh (approximately USc3/kWh), which is subsidised;
• Maintain the tariff for ferrochrome smelters and other miners to be maintained at US$0.0986/kWh, respectively, and ensure that the resources are ring-fenced in a Special Account solely for purposes of importing electricity.
• ZESA to be allowed to bill all other exporters and foreign currency earners in foreign currency and ensure that the resources are ring-fenced in a Special Account solely for purposes of importing electricity.