Business Community up in arms over proposed 49% Electricity Tariff Hike

The business community in Zimbabwe has added its voice to opposition to a proposed electricity tariff hike of 49% by the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), saying the economy cannot sustain any cost increases. In a joint press statement released on Wednesday, the Confederation of Zimbabwe Industries, the Chamber of Mines of Zimbabwe, the Zimbabwe Farmers Union and the Commercial Farmers Union said focus should be on “improving efficiencies” and saving 300 MW to 500 MW.

“This must be the focus area of the utility (ZETDC) instead of taking the simplistic route of hiding these inefficiencies through tariff increases,” said the statement. ZETDC has applied for a 49% electricity tariff increase that will see tariffs increase to 14.69 US cents per kilowatt hour from the current 9.86c. The power utility said the tariff hike is cost reflective and necessary to augment emergency power imports.

However, the business community argues that most entities are already struggling to pay electricity tariffs at current levels, as evidenced by the US$ 1bn owed to ZETDC by some consumers. “This debt is a clear demonstration that consumers are unable to take any tariff increase. If anything, there is a need for tariff reduction,” said the statement. “Significant cost reduction can be realised within the utility itself,” said the statement, adding that payroll costs and head office overheads should be reduced “like what is happening in all other sectors of the economy”.

The business community also opposed the decision to bring emergency power from diesel generation into the tariff equation, saying the investment can be better utilised if deployed to provide a permanent solution to the energy crisis. The statement by the business community comes at a time when utility costs are significantly reducing the country’s competitiveness. “Any increase in tariff will only serve to reverse all the progress by government and the private sector to date towards addressing competitiveness and productivity of the economy,” the statement said.

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