The Reserve Bank of Zimbabwe (RBZ) has shot down a proposal by ZESA Holdings for businesses to wholly pay electricity tariff in United States dollar following the government’s policy to align tariff payment with the foreign retention threshold.
ZESA believes a 100% US$ payment tariff would ensure the country enjoys a steady supply of electricity.
But RBZ governor John Mangudya told Business Times there is a need to balance what businesses get and what they have to pay for electricity.
“ZESA proposed a 100% payment in US$ but industry can only pay in US$ to the extent of their US$ retention for example the exporters can only pay 75% in US$ and the rest in local currency while those US$ domestic sales can pay 85% in US$ and the balance in RTGS.
“That’s the policy and we are sticking to that stance,” Mangudya said.
ZESA, which charges an average of US$0.1221 per kilowatt hour, or Zimbabwe dollar equivalent, generates less than 500 megawatts (MW) a day against a national demand of 2 500MW.
To cover for the shortfall, ZESA imports electricity from regional power utilities and has imposed a crippling unscheduled load shedding lasting more than 12 hours daily.
The rolling power cuts have forced companies to use backup diesel generators, which are expensive to run.
ZESA has, however, argued that getting 100% forex from commercial consumers would ensure that consumers get uninterrupted electricity supply as it will be able to import electricity and also import critical parts to maintain its electricity distribution network.
ZESA is battling low electricity generation from its power stations in Kariba, Hwange, Bulawayo, Harare and Munyati.
While low water levels at Kariba Dam has resulted in Kariba South Hydroelectric Power Station generating less than 400MW from a possible 1 050MW, thermal power stations in Hwange, Bulawayo, Munyati and Harare have outlived their lifespan.
The obsolete equipment at the thermal power stations has resulted in low power generation.
Zimbabwe Electricity Transmission and Distribution Company acting MD Howard Choga said a cost-reflective tariff remained key in the efficient distribution of electricity.