Brighton Gumbo Business Reporter—
THE Bulawayo business community has objected to the proposed 49 percent electricity tariff increase by Zesa saying the move will push up production costs. At the moment, companies in Bulawayo and the country at large are grappling with challenges such as obsolete equipment, liquidity constraints and competition from cheap imported products.
Due to such operational constraints, industry’s efforts to increase productivity to competitive levels remains constrained with some companies being compelled to streamline operations or close down.
A few weeks ago, Zesa announced that it had applied to the Zimbabwe Energy Regulatory Authority seeking approval to increase power tariffs from 9,86 cents per kilowatt hour to 14,69cents/kWh. The average electricity cost in Southern Africa is 14c/kWh.
Energy and Power Development Minister Samuel Undenge has said the proposal could soon be approved. Speaking during a stakeholders meeting on the proposed power tariffs increase last week, the Zimbabwe National Chamber of Commerce chairperson for Bulawayo, Tshidzanani Malaba, said the proposal was “alarming” in the current economic climate. He said if implemented it was likely to have a distressing effect on the growth of the economy as it would impact on the sectors of the economy that rely heavily on electricity.
“What this means for the country is that the few remaining businesses are likely to incur increased operational costs further constraining local industry’s competitiveness against cheap imports,” Malaba said. “Given the prevailing economic circumstances, we call for a downward adjustment in the tariffs so that businesses are able to pay their bills and remain viable.”
Malaba noted that if electricity tariffs were reduced, prices of locally manufactured products are also bound to go down. Resultantly, this would see local companies becoming competitive compared to regional countries. Participants at the consultative meeting concurred that the current power tariff structure was rendering local companies uncompetitive.
“So this means any increase to the cost of doing business would simply be unsustainable making business unviable,” said one of the participants who also requested not to be named. The business leaders urged Zesa to maximise on the falling South African rand to source more power from the neighbouring country.
“I believe that during the 2015 mid-term fiscal statement, Finance and Economic Development Minister Patrick Chinamasa announced that that power tariffs to the mining industry, in particular the gold mining sector would be reviewed downwards . . . Unfortunately, this still hasn’t happened,” said another business executive who also preferred not to be named.
Minister Undenge recently recommended that mining firms should look for their own power supplies to augment imports.