Zimbabwe Energy Regulatory Authority completes cost-supply studies

ERERA Power lines27 October 2013, Harare – The Zimbabwe Energy Regulatory Authority or Zera says the cost of supply study commissioned in June this year was complete, and it will assist in the assessment of new tariffs for the future.

The study is aimed at determining the cost the utility spends at the moment to supply power to all sectors of the economy, including commercial and residential areas.

Zera chief executive, Gloria Magombo said the authority was now waiting for next year’s tariff application, so that the study would be used as a benchmark.

“The study will show us where we can reduce costs. Any tariffs in future will be linked to performance to ensure that the costs which are being taken on-board for determination of tariffs are prudently and efficiently incurred,” she said, adding that an implementation framework was already in place.

Zimbabwe last carried out a cost of supply study in 2004, but the results reflected very low tariffs that were unfavourable to private sector participation.

Zimbabwe’s tariffs have remained problematic for investors, as they need to sell power at a price that permits them to break even and make profits, hence the need for the cost of supply study.

The study also identifies areas of improvement and where the power utilities can increase efficiencies.

A Confederation of Zimbabwe Industries (CZI) manufacturing sector survey released last month identified high electricity charges as a major constraint affecting business viability.

The industrial body recommended a rational and realistic review of the power industry as a necessity.

“The slightest increase in the cost of electricity sends shockwaves in prices and operations, pushing up productions costs and decreasing the attractiveness of local goods, in terms of pricing,” the survey noted.

For industrial customers, the Zimbabwe Electricity Transmission Distribution Company (Zetdc) tariffs are slightly above average for the region, despite special arrangements for large customers in some instances.

Zetdc charges are pegged at US$0,9 per kilowatt, US$0,6 for South Africa’s Eskom, and Zesco Zambia’s US$0,4.

Secretary for Energy and Power Development, Partson Mbiriri said government remains committed to attracting investors who may assist the power utility to improve the country’s chronic power supply situation.

However, concern has been raised by prospective investors, as they are asked by regulatory authorities to foot the bill for interconnection from a generation scheme to the nearest network.

Questions have also been raised as to why ZETDC is not prepared to pick up part of the cost in transmitting power from the national grid.

Magombo said the issue of facilitation was critical in light of the massive power shortfall Zimbabwe is experiencing

– The Standard

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