Electricity rates will continue to be revised according to inflation and exchange rate movements until they reflect the cost of production, a cabinet minister said.
Last month, Zesa made a 30% increase in the energy tariff for its prepaid customers, with the cost of the 200-unit package used by many households rising from $870 to $1,127.
The utility has struggled to finance energy imports, maintain an experienced staff and service its distribution infrastructure due to sub-economic tariffs.
Energy and Energy Development Minister Zhemu Soda told The Sunday Mail recently that cheap electricity was no longer guaranteed.
“To achieve what we intend, namely, to provide adequate energy and sustainable electricity, it is necessary that tariffs are regularly reviewed,” said Minister Soda.
“It is also imperative that energy be sold at rates that reflect the cost so that the producer can continue to offer and improve service delivery.”
He said that charging sub-economic rates will result in a continued decline in the quantity and quality of service.
“Movements in the exchange rate and inflation will continue to threaten the viability of the energy utility if tariffs are not increased,” said Minister Soda.
“The long-term effect is the failure to maintain the network.
“We cannot guarantee the nation cheap electricity when it is not sustainable.”
In October 2019, the government introduced a tariff indexing formula that aligns energy tariffs with inflation and exchange rate movements.
Under the system, tariffs must be periodically adjusted each time inflation and exchange rates increase by more than 10%.
“The current revisions are the result of an approval granted in October 2019 whereby the concessionaire must adjust the electricity tariff based on exchange rate and inflation movements.
“The tariffs were intended to reflect the costs of generation, import and distribution in order to prevent Zesa from returning to the days when it was unable to buy coal, pay for imports, maintain its plants or repair damage.
“The recent tariff increase will help improve the viability of the power utility and ensure Zesa’s operational stability, although not at the expected level,” said Minister Soda.
Currently, Zesa imports energy from South Africa and Mozambique.
Minister Soda said the Hwange Thermal Power Plant, which is operating with four of the six generating units, was producing 440 MW.
Two units of the plant are under maintenance.
“The Kariba Plant is producing almost 1 050 MW and if we add all this together with the generation of other small plants with capacities around 30 MW, we will have about 1500 MW.
“As a country, we need power generation above 1,500 MW to have stable electricity,” said the minister.
The recent tariff adjustment will see prepaid consumers paying $2.25 per kWh for the first 50 units, $4.51 for the next 150 units and $7.89 for the next 201-300 units.
Energy units above 400 will now be billed at $13.50.
All prices include the 6 percent rural electrification fee.
Meanwhile, a failure in one of Hwange’s power generation units has caused erratic power supplies for the past two weeks.
The failure resulted in a load reduction of about 200 MW during the night peak period.