By BRANDON JOSPHAT
THE Zimbabwe Electricity Supply Authority (Zesa) has raised tariffs for exporters by eight percent as part of its efforts to enhance its capacity to import electricity from neighbouring countries as the company is failing to meet the demand for power.
This comes after the Reserve Bank of Zimbabwe (RBZ) has given Zesa the green light to bill exporters in US dollars to enable the under-pressure power utility to generate foreign currency and improve the power supply in the country.
In a letter dated, July 20 addressed to the chief executive officer of the Chamber of Mines of Zimbabwe Isaac Kwesu, Zesa chairperson Sydney Gata said they were failing to meet the demand of power from the mining sector as they have been charging less money in order to secure electricity from outside the country.
“The supply-demand gap is growing at unprecedented rates, driven by a mining economy which is targeting US$12 billion annual production by 2023.
“The increase in mining industry demand is also inducing other significant industrial loads. In the past year, Zesa received firm applications for new supply and for current capacity increases from mining and smelting customers alone, aggregating to 2 100 megawatts of additional load by 2025.
“Zesa is under immense pressure to settle the ballooning power import debt.
“Zesa had secured an Afrexim Bank facility which it used to pay off the power import debt in February, but the debt is growing back exponentially, posing a threat to the security of supply.
“Zesa has been charging an average tariff of USc9.86/kWh for exporting customers other than Ferrochrome smelters, which however is below cost and hence has been failing to capacitate the Utility to ensure the security of power supply and efficient service delivery,” read part of the letter.
Gata added that the utility was drowning in debts thereby posing a threat that they would not be able to import power from their suppliers by month end.
“Furthermore, there is the incapacitation of operations due to inadequate operational vehicles, machinery, and spares, resulting in deferment of operation and maintenance activities on the transmission and distribution network.
“Electricity supply is in dire shortage, not only in Zimbabwe but also throughout the Sadc region, as evidenced by Eskom’s current Stage 6 Load Shedding Status.
“Zesa has negotiated for power imports with Zesco of Zambia and EDM of Mozambique.
“However, since January 2022 Zesa has failed to draw from these contracts because of shortage of funds as Zesa tariffs cannot sustain the import arrangements.
“The power import contracts which Zesa had negotiated will not be available beyond the end of July 2022. Zesco has been spinning the energy it had allocated to Zesa at a huge loss of US$ 6.3 million per month since January 2022, due to Zesa’s failure to pay for it.
“Eskom is in unprecedented trouble with over 18 000 megawatts of capacity shortfall and is putting pressure on Zesco, HCB, and EDM to take over the same contracts Zesa had secured.
“Zesa now has up to 31 July 2022 to draw the supply or else the contracts will be cancelled and the supply re-allocated to other utilities in the SAPP,” he said.
Gata added that to be able to resolve the situation they would raise tariffs so that they enter into fresh negotiations with neighbouring countries.
“Zesa is no longer able to continue supplying electricity to exporting customers at USc9.86/kWh, as it is unsustainable.
“Further to that, Hwange Stage 3 Project, which is expected to come in November 2022, will be coming in at USc10.7/kWh, translating to over USc12.0/kWh to end-customers after adding Zesa overheads and use of system charges.
“The exporter’s tariff will therefore be USc10.63/kWh with effect from 1 August 2022.
“Customers are also being advised of an option to join the IEUG, which has the potential to negotiate for lower tariffs from regional producers such as EDM, HCB and Zesco, Zesa’s wheeling charges will be applied at the barest minimum to help ensure the viability of businesses in Zimbabwe,” Gata said. – Daily News