ZESA Holdings executive chairman, Sydney Gata, has warned of imminent debilitating power cuts due to the non-cost reflective electricity tariffs which threaten the power utility’s viability.
Speaking to Business Weekly on Thursday, Gata said ZESA last had a viable tariff in 2019 and the current tariff is not sustainable. He said:
We are heading for another severe load shedding. How long can you stay in business when you produce at a cost nearly twice the price you are selling at?
Gata said ZESA is importing electricity at a cost of between US8c and US9c per unit while the cost of producing locally is US9.5c.
ZESA is supplying power to households at far less than the cost of importing and producing, that is, US6c per unit.
Zimbabwe needs about 1 600 megawatts but generates an average of 1 100 MW and reduces the deficit with imports from South Africa, Zambia and Mozambique.
China’s Sino Hydro is currently building two more units, also known as 7 and 8, at Hwange Thermal Power Station but the project was delayed by six months due to COVID-19.
Gata also revealed that the Government is reluctant to approve a new tariff that will ensure that ZESA meets the expectations of its customers. He said:
Because of that, we had elaborate discussions (with the Government) to have interim support in the form of a viable tariff (to keep running) but there is no coherent position.
We need a maintenance budget and (funds) to connect new customers but we cannot because of the sub-economic tariff.
Even though we have recommendations (on viable tariff structures) by a number of consultants, that has been ignored. We last had a viable power price around 2019.
The last power price review was in January 2022 when the Zimbabwe Energy Regulatory Authority (ZERA) increased electricity tariffs by 12.3 per cent.