The Zimbabwe Energy Council (Zec) has called for a review of the tariff framework, which it says is stifling investment into the capital intensive energy sector.
BY BUSINESS REPORTER
The call comes amid clamours by players in the industry for a review. The last time a review was made is seven years ago.
Zec chairman, Amiel Matindike said a review of the tariff has been outstanding for a long time and was slowly becoming a threat to economic recovery.
He warned the failure to pragmatically and decisively managing it was causing some distortions in business planning.
Matindike said there was discord with a number of sectors coming up with a different tariff regime. Gold miners are demanding a tariff of 7c per kilowatt hour (kWh), chrome miners (4c/kWh), and the Confederation of Zimbabwe Industries is proposing a tariff of 7c/kWh.
“The tariff component has a strong bearing on private sector investment in the power sector. Generously and loosely speaking, no serious investor would invest in a sector where the power is procured at 14c/kWh and sold at 9,8c/kWh to the end user,” Matindike said.
“To exacerbate the situation, there is no subsidy to cover for the shortfall, since the government is financially hamstrung. There is need to review the tariff framework for the development of the sector.”
In 2016, the Zimbabwe Energy Regulatory Authority down a proposal by the Zimbabwe Electricity, Transmission and Distribution Company for a 49% tariff increase to 14,69 c/kWh.
Matindike proposed the amendment of the Rural Electrification Fund to an Energy Fund, which should solely be responsible for fund-raising and harnessing of funding.
“There should be a viable business model that gives the private sector the opportunity to be implementers of the various projects. This separation of roles of funders and project implementing partners will enhance transparency and efficiency in accelerating energy access,” he said.