The ZERC authorized the ZESA to increase its rates on Thursday 25 August 2011 from 7, 53 cents to 9, 83 cents per unit per hour, arguing that Zimbabwe’s electricity charges are the lowest in the region where rates are reportedly between 13-14 cents kilowatt hour (VOA News 26 August 2011).
According to Fullard Gwasira, the ZESA Holdings spokesman, the increases are meant to bolster power generation, reduce electricity blackouts, and use additional revenue to purchase modern billing equipment to address residents’ concerns on inconsistent billing.
This proposed increase is the second in 2011 by ZESA, again, after seeking and getting ZERC approval for an increase effective 1 February 2011, a situation that has left thousands of consumers in debt, something they have failed to critically examine before this latest increase has been approved. This was eventually shelved after government intervention. The same justification that ZESA is offering today is the same that they gave in February as they justified the proposed increases.
The Herald (21 February 2011) quoted Fullard Gwasira, the ZESA Spokesman as saying: “The increase in tariff allows ZESA to import more power and ensure consistency in power supplies. It will reduce load-shedding. Consumers should actually expect an improvement in the services offered since we are now operating all power stations efficiently,"
The experience of residents on load-shedding, non-regular maintenance of electricity infrastructure leading to high incidences of electrocution of people, inconsistent billing and numerous apologies from ZESA, are crucial issues that have to be immediately addressed if ZESA is to convince all stakeholders, mainly ordinary consumers about the new rates.
At its special meeting on 8 July 2010, the Competitions and Tariffs Commission (CTC) found that ZESA’s actions constituted "restrictive practices that are a manifestation of the abuse of monopoly". In a statement, quoted in various media in August 2010, the CTC said: "ZESA should use actual meter readings when billing its customers subject to the provisions of the Zimbabwe Electricity Supply Authority (Miscellaneous Charges) By-Laws" of 1998.
While the HRT recognizes the significant strides ZESA has made in trying to address power generation challenges, the current wave of increases are ‘ill-timed, inconsiderate and will plunge most consumers into deeper debt’ because their incomes have not changed in the last 12 months.
In separate responses to a question on what they thought on the ZESA increases, the majority of residents denounced ZESA for even seeking authority from ZERC to increase rates, which was subsequently given, saying that the national power utility was using inappropriate tools to determine the new electricity rates. The performance of the economy and the ability of the consumers to pay the new tariffs determined the success or failure in the achievement of the intended objectives.
As long as the majority of citizens earn below the poverty datum line as released by the Poverty Reduction Forum Trust of Zimbabwe and the Consumer Council of Zimbabwe, there is potential for increased conflict between ZESA and its customers who will fail to pay the rates in full, accumulating huge debt in the process.
Considering that schools reopen in a fortnight, most parents are already battling to raise school fees and levies for their children and meet other financial obligations like rentals, medical needs, food and water bills. The new increases will impact negatively on these residents whose incomes have remained stagnant.
The ideal approach from ZESA that the HRT expected to be followed was a major stakeholders’ meeting involving consumer organizations, ZESA Holdings, business and industry to deliberate on power generation challenges, load shedding and billing of electricity, among key points of discussion.
As the pressure from the residents of Harare for a quick solution mounts on the HRT to intervene, ZESA is urged to expedite the process for the installation of pre-Paid meters which would ensure that residents pay for electricity actually consumed rather than the current situation where most bills are based on estimates.
Before ZESA can institute the new increases, the power utility should comply with the directive given by the Competitions and Tariffs Commission (CTC), a statutory body mandated to regulate competition and abuse of monopolies by state and private enterprises in terms of the Competition Act (Chapter 14:28). This was subsequently endorsed confirmed in a High Court ruling which ordered ZESA to credit accounts of consumers overcharged against set rates between February 2009 and November 2009.
Post published in: News
By now ZESA Holdings should have long tabled their 2010 audited financial statements in parliament and these should show cause why they need a financial bail out. No transparency, No tariff increase and that is simple. ZESA should bare all and put it’s cards on the table.
In any case how do you make a loss when you import electricity and mark it up? Zesa should be making a profit and not load shedding. Whether Hwange or Kariba are up is not the issue. The issue is that Zesa has a poor revenue collection strategy and the public cannot be abused because of that.
The ZERC and ZESA relationship is not healthy. The ZERC does not regulate ZESA Holdings but it’s subsidiaries ZETDC and ZPC. These are the only two power players in the country. Further more there is no arms length relationship between ZETDC And ZPC. All revenue collection is collected by ZETDC and ZPC is given operational expenditure by ZESA Holdings. The public is finance a huge / bloated delivery mechanism with three boards of directors and executive management committees where one committed set would be enough.
It is time to rethink the whole electricity delivery mechanism and get serious players involved.