- New US dollar power tariff is US$12.21c/kWh for exporters and an average tariff is US$10.63c/kWh for other foreign currency earners
- CZI believes that US dollar electricity billing should be adjusted according to the ratio of foreign currency sales
- ZETDC believes the new US dollar tariffs are fair as they are meant to improve the power supply and address faults
Harare-The Confederation of Zimbabwe Industries (CZI) has suggested that US dollar electricity billing should be adjusted according to the ratio of foreign currency sales, as businesses have different mixes of local currency and foreign exchange earnings. This proposal comes in response to ZETDC's announcement of a new US dollar power tariff of US$12.21c/kWh for exporters and an average tariff of US$10.63c/kWh for other foreign currency earners. CZI believes this adjustment would better account for businesses' differing financial situations and ensure that all businesses have access to fair and affordable electricity.
ZETDC, on the contrary, believes the new tariffs are fair as they are meant to improve the power supply and address faults, but CZI said this had not been the case. It said selected businesses were paying bills in foreign currency regardless of foreign currency sales, resulting in businesses needing extra foreign currency to settle bills. It added that the current level of retained foreign exchange was acting as an indirect tax due to the difference between the formal and widely quoted market exchange rates used to purchase supplies.
Previously, most customers paid in Zimbabwe dollars, based on a stepped billing system with tariffs in line with the electricity consumed. However, the industrial lobby group pointed out that the new tariff was far above the regional average of US$11.7c/kWh, as indicated by Southern African Power Pool (SAPP) data, making Zimbabwe's value-added exports less competitive due to excessive costs
In addition, companies were charged different power tariffs, resulting in an effective tariff rate of US$13.4c/kWh. CZI noted that the MD (Maximum Demand) charge of US$5.71 per unit kilowatt, which is typically incurred by most industrial users, further increases the cost of production.
The industrial businesses lobby group added that businesses that were non-exporters were receiving bills in 100 percent foreign currency regardless of foreign currency sales, export levels, and other factors. CZI argued that bills should be matched to local and foreign currency sales ratios, as the Zimbabwean dollar is legal tender and refusing to accept it from customers is illegal according to SI 127 and other regulations. It also added that the auction rate should be used as the reference point for conversion to local currency for bill payment, as it is for product pricing.
CZI argued that in order to create fairness, consumers should be treated the same in terms of effective tariffs, billing, and payment methods, unless a special dispensation is given. It suggested that ZETDC should communicate power cut schedules to allow for planning and resource allocation.
Due to the intermittent power cuts, capacity utilisation has decreased and productivity no longer matches fixed costs
According to ZETDC Commercial Service Director Engineer Gift Ndlovu, the challenge is infrastructure, with 80 percent needing overhaul in order to improve the integrity. He said decades of grid non-maintenance due to the sub-economic tariff in the past decade has been a factor.
CZI said the cost of production has risen due to diesel-powered generator sets and significant foreign currency outlay. It added that significant time is lost when there is no power during the day and generators cannot be run continuously. It said the current situation is preventing businesses from structuring production shifts, opening doors, procuring alternative energy on time, stocking raw materials, and planning.
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