The Zimbabwe Energy Regulatory Authority has shot down the Zimbabwe Electricity Transmission and Distribution Company’s request for a 5 percent power tariff increase, in what may force ZETDC to cut its budgets.
ZETDC’s application was for a five percent increase on the power tariff of 9,86c kWh to 10,36c kWh in line with the utility’s revenue target of $890 million, but ZERA said the request will not be granted.
The power transmission and distribution company said it had consulted with Government, mining, agricultural, commercial and domestic consumers of electricity to determine the decision it took.
“After duly considering the tariff application, the macro-economic conditions prevailing in the country, written and oral submissions from various consumers and stakeholders as well as facts and evidence provided by ZETDC, the ZERA board made the following decision; that the tariff be maintained at the previous level effective September 1 2014,” ZERA said in a statement yesterday.
ZERA said in coming up with the determination, it had reasoned that the current tariff level was sufficient to cover ZETDC’s costs.
The authority said its board also urged ZETDC to improve debt collection and enhance its efficiencies in order to cut down on the costs.
The Zimbabwe Electricity Transmission and Distribution Company will be forced to cut its maintenance budget to rein in costs after regulator turned down its request to increase power tariff by 5 percent.
ZETDC managing director Mr Julian Chinembiri early this month said they would cut maintenance costs if the tariff was not increased.
However, he said in the event ZERA dismissed the request to hike tariffs, ZETDC would be forced to cut the maintenance budget, which would compromise reliability of the transmission network.
“In the event that they do not award the tariff increase we would have to cut (costs) somewhere of which most of the costs are fixed.
“If the maintenance budget is reduced, it means that service delivery and network reliability will be low because of lack of maintenance. Maintenance is the only area where we can cut,” he said.
In fact, ZETDC had initially made a request for a 12 percent tariff increase, which was going to be a record increase for power.
Eventually, the power utility settled for less tariff increase request of 5 percent to avoid putting pressure on the cost of goods and services arising from the high cost of electricity in the country.