Confederation of Zimbabwe Industries (CZI) was considering legal action against Zesa Holdings and its subsidiary Zimbabwe Electricity Transmission Distribution Company with a view of forcing the power utilities to shelve the tariff hike due to take effect on Thursday.
CZI has described the move as unjustified and unsustainable as no consultations were conducted between Zimbabwe Electricity Regulatory Authority Commission (Zerc), consumers and industry.
According to the industrial body, power tariff increase announced by Zerc would result in a 53% jump in industries that were paying 5 cents per kilowatt/hour.
CZI president Joseph Kanyekanye said on they held meeting with Zesa on Monday and the power utility failed to justify the tariff increase cost of power generation had not risen significantly.
“Based on figures provided by Zesa and in an attempt to justify their increase, for every dollar paid by a consumer for electricity, only about 32% will be spent on generating, buying and distributing electricity while 45% goes towards overheads especially salaries, taxes and rural electrification levy. This is obviously out of balance,” said Kanyekanye.
The tariff increase means that consumers will have to fork out more to keep their lights on as they would not be billed at 9,83 cents per kilowatt/hour from 7,53c starting Thursday.
“We are engaging lawyers to force Zesa to reverse the tariff increase as it is illegal and we are appealing to the Minister of Energy and Power Development Elton Mangoma to establish a board for the regulatory commission,” he said.
“This is a US$ economy. It is unheard of to have a 53% increase on tariffs. We want the tariff to be reversed and the government to appoint a properly constituted Zerc board,” he said.
Kanyekanye said Zesa’s salary and administration expenses alone exceeded the cost of coal, diesel, Kariba water and electricity imports combined.
He said according to the Electricity Act Section 4:4, Zerc should take a position to increase tariffs from consumers and operators.
“No consultation took place on the recent tariff increase,” he said.
He said the power utility had been arguing that the country’s tariff structure was below regional average, but countries like South Africa justified their high tariffs by channelling some of the resources towards power generation.
The CZI president said in Zimbabwe there was no meaningful expansion being done.
Zimbabwe National Chamber of Commerce president Oswell Binha said Zesa should address underlying challenges faced by users before effecting a tariff adjustment.
“Efficiency levels are frustratingly low; billing system is poor; state of the power generation needs complete overhaul; skills gap; top heavy structure, unless and until these and many other issues are dealt with, the tariff adjustment may just be a stepping stone to yet another review in the short term,” Binha said.
He said industry would experience serious challenges in absorbing the adjustment and naturally would have no choice, but to pass it on to consumers.
It is estimated that Zesa is owed $470 million by users.