A Cabinet Minister has said electricity tariffs will continue to be reviewed in line with inflation and exchange rate movements until they reflect the cost of production.
The country’s power utility, ZESA Holdings, through its power distribution subsidiary, the Zimbabwe Electricity Distribution Company (ZETDC), last month effected a 30 per cent power tariff hike for its prepaid customers.
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The increase saw the cost of the 200-unit package used by many households rising from $870 to $1 127.
Energy and Power Development Minister Zhemu Soda told The Sunday Mail recently that cheap electricity was no longer guaranteed.
Soda stated that the recent tariff increase will help improve the power utility’s viability and ensure operational stability of the ZESA although not to the level expected. He said:
In order for us to achieve what we are envisioning, that is to provide adequate power and sustainable electricity, there is a need for tariffs to be reviewed regularly.
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 the service delivery.
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.
In October 2019, the Government introduced a tariff indexation formula that aligns power tariffs to movements in inflation and the exchange rate.
Under the system, tariffs are supposed to be adjusted periodically each time inflation and exchange rates move by more than 10 per cent.