ZESA must first publish their expenses before hiking tarrifs

ONE day, yours truly made a sacrifice and doled out the last dollar in the pocket to a poor beggar in the street. End of day, he bumped into the same freeloading beggar at a drinking hole imbibing and riotously eating with a cluster of parasitic women around him.

The proposed hike of electricity tariff by Zesa Holdings and the recent developments within the electric utility raked up this memory, for they share similarities. Both Zesa and the dear beggar misplace their priorities at somebody’s expense.

Zesa’s application for 14% tariff hike is currently under the scrutiny of an inter-ministerial committee. Initially, the parastatal applied to have the tariff raised from 9.86 cents per kilowatt per hour to 14.6c/kWh. However, the regulatory authority, Zimbabwe Electricity Regulatory Authority (ZERA) recommended to cabinet an increase of 11.2c /kWh. The hike is ostensibly meant to cover for import costs of 300 and 40 megawatts of electricity from South Africa and Mozambique respectively.

The proposed increase was received with strong resistance from people of all walks of life. Electricity is one of the chief economic drivers whose prices have ripple effects on the political and socio-economic lives of residents and industry. The Confederation of Zimbabwe Industries (CZI), Chamber of Mines of Zimbabwe, Zimbabwe Farmers Union (ZFU), Commercial Farmers Union (CFU), Zimbabwe Commercial Farmers Union (ZCFU) and other business organizations have all expressed their reservations on the increase of electricity levy, arguing that the increase would come at a huge cost on the economy.

Indeed, the increase will add to the ordinary person’s woes as he is at the last point in the supply chain to bear the net effects. The hike will definitely increase the production cost of goods and services. Unfortunately, the burden will be passed on to the final consumer, the ordinary resident who is already struggling to make ends meet.

Although the increment seems to be insignificant, residents are paying the current rates through their noses. They have many other financial obligations which cost them an arm and a leg. What if all utility and service providers decide to hike their products? It is unfortunate that the poor citizen has always become the first port of call for everybody who needs money to fund a project. Toll gates mushroomed all over and there were even plans to install more before the ministry changed hands in the cabinet reshuffle. Ingenuity and performance can never be measured by extortionate actions. A good performer thinks outside the box and solves challenges without transferring the burden to the poor.

Of course, electricity has to be imported to cover for the declining electricity generation at Kariba due to low water level. However, there are other avenues that the parastatal can explore before resorting to the obvious. What irks everybody most is the insincerity of Zesa. It acts as if it is virtually moneyless yet the lifestyle of its executives and employees betrays that pretense.

A lifestyle audit at Zesa will bring to light how the utility company misplaces its priorities. For transparency’s sake, Zesa must publish its budget that shows operating costs and costs of importing power supply. It will not surprise anyone to discover that a greater chunk goes to salaries and perks.

Zesa should have restructured itself in line with the declined electricity generation. There is no need to keep a sea of highly remunerated employees when your generation capacity at Kariba has declined from 750mw to 275mw. People are aware that Zesa dishes out free electricity to every serving and retired employees. Of course it is a longstanding company tradition but the macro-environment prevailing dictates that such policies be held at abeyance. Continuing with such profligacy begets mistrust in Zesa.

Even the way that public funds are managed at Zesa justifies people’s resistance to the tariff hike. The recent expose of Minister Samuel Undenge’s shenanigan makes it even more unwarrantable to increase tariffs. Undenge, who is on record authoritatively saying there was no going back on tariff increase, is alleged to have directed Zimbabwe Power Company (ZPC) and the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) to engage Psychology Maziwisa and Oscar Pambuka’s company for public relations campaign.

A company that is extending a begging bowl to the poor has the luxury of hiring a public relations company when it has its own public relations department. Only God knows what Undenge profited from the corrupt arrangement. As for Maziwisa, a new entrant to the august house, he has started on a very bad note that has dented his chances of a ministerial appointment. Thank God that the deal has been stopped but people are keenly waiting to see if any teeth will sink into Undenge’s flesh.

Before burdening consumers, Zesa must recover over $1 billion debt it is owed. They know their debtors and so must be brave enough to face them, notwithstanding their footing. That money can go a long way in funding various energy generation projects that were mused on some years back but have not yet kicked off.

These debtors must be put on pre-paid meter system so that the debt can be recovered through the 40% debt recovery plan that Zesa is taking from every electricity purchase. In fact Zesa would ensure a 100% revenue collection if it puts everybody on the prepaid meter system. Zesa seems to be compensating that debt by increasing electricity tariff. It’s unfortunate that those who are currently paying faithfully for their electricity will be the same people who will continue to pay for the increased tariff. It becomes unfair to be punished for being faithful.

It is believed that Zesa is losing about 40% of electricity during transmission and distribution. Is it not fair for it to plug the loopholes before rushing to the poor consumers?

Zesa has been basing its arguments for an increase on the regional pricing regime. They cannot increase tariffs just to match regional prices. They must not forget that the economies are different and there are many areas where these pricing disparities exist. That is the reason why workers have not been demanding salaries that match with those of the region. Electricity is an economic enabler which every investor considers before investing in a country. Zimbabwe is seriously in need of investment. Therefore, Zesa should seek to make these economic enablers cheaper so as to attract investors rather than seek to match regional costs.

It is also high time that Zesa reconsiders the unbundling exercise it undertook a few years ago because it is costly. Instead of importing electricity, it must consider having synergies with those foreign power suppliers. It must also increase efforts into energy generation especially the Batoka Gorge project which is expected to generate 2400mw to be shared between Zambia and Zimbabwe.

As cabinet deliberates on the Zesa application for tariff increase, it must not be lost to the ripple socio-political and economic effects a hike will have.

 

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  1. Blake Carrington

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