Zimpapers Logo

Many Zimbabwean companies are struggling to survive with just a few managing to break even. A number of companies are failing to meet their financial obligations such as paying salaries, taxes, water and electricity bills as well as rates.

Many of these companies now owe workers millions of dollars in salary arrears and have not paid bills for several months. Most of the companies are in urgent need of capital injection but the major obstacle is that the money is too expensive because of the high interest rates charged by banks.

Production costs for most of the companies are very high and this has been attributed to obsolete equipment and high labour costs. The thrust at the moment is to increase capacity utilisation of companies from the present average of just above 30 percent to above 60 percent by 2017. This entails replacing obsolete equipment with new machinery and this requires a lot of money hence the need for banks to play their role by lowering interest rates to enable businesses to borrow money.

It is a fact that businesses cannot absorb additional costs but should instead adopt measures to contain costs if they are to survive this phase which we want to believe is a passing phase. The rejection of the proposed electricity tariff increase by businesses was therefore not a surprise given the prevailing conditions which we have already alluded to.

The Confederation of Zimbabwe Industries, the Zimbabwe Chamber of Mines, the Zimbabwe Farmers’ Union, the Commercial Farmers’ Union and the Zimbabwe Commercial farmers’ Union said they all objected to the proposed electricity tariff increase which they said would negatively impact on their operations.

Power utility, Zesa Holdings has applied for a 49 percent electricity tariff increase which it says is necessary to augment emergency power imports and reduce load shedding.

Businesses said instead of resorting to increasing tariffs, Zesa should adopt costs containment measures like what other businesses are doing. They said the fact that Zesa is owed $1 billion by consumers that include businesses, is evidence enough that consumers cannot absorb any tariff increase.

The businesses said it was crucial for Zesa to work on improving efficiencies at power stations. Zesa Holdings is negotiating with Electricidad de Mocambique (EDM) to import 100MW. The country is already enjoying an improved power supply situation since last month when it started importing 300MW from Eskom of South Africa.

Zimbabwe is at the moment generating 1,270MW against a forecast demand of 1,400MW. This means that if the country imports about 400MW, supply will exceed demand. Zesa Holdings proposed the 49 percent tariff increases before the latest developments so there is every reason to review the situation. We totally agree that most businesses cannot absorb any increase in electricity charges given the fact that they are struggling to pay the current tariffs.

The government should reconsider its position given the latest developments which indicate that they might not be any need to install the proposed 200MW emergency power plant at Dema Substation. We want to implore the Energy and Power Development Minister Samuel Undenge to review government position on tariff increase given the latest developments.

It serves no purpose to cripple companies through unaffordable tariffs at a time when government is to reduce the cost of doing business in the country. Businesses are the bulk consumers of electricity and it is therefore imperative for Zesa Holdings to ensure the tariffs remain affordable.

We want to once again call upon Minister Undenge to shelve the proposed tariff increase and concentrate on the alternatives of increasing power supplies which Zesa Holdings has already embarked on.