Debt-ridden Zesa seeks tariff hike

Debt-ridden Zesa seeks tariff hike
Published: 15 December 2017 (333 Views)
THE debt-ridden Zimbabwe Electricity Supply Authority (Zesa) has written to government lobbying for a tariff hike with effect from next month amid reports the national power utility is technically insolvent, the Zimbabwe Independent reported.

The parastatal, which has sought a tariff increase in the last few years arguing that it was charging "a lower-than-cost tariff" at a time it is expected to carry out major infrastructure development projects, says the 9,86 cents per kilowatt hour (kWh) it has been charging does not allow it to break even.

Zesa's efforts to review tariffs from 9,86c kWh to 14,64c kWh were last year blocked by the government, through the Zimbabwe Energy Regulatory Authority, saying it should seek ways of reducing its cost structure while also enhancing its debt collection mechanisms.

This comes on the backdrop of reports that Zesa owes its local and international suppliers close to US$1 billion and if no intervention is done Zimbabwe can soon experience massive power shortages. Zesa's 2016 annual report shows that the parastatal has non-current liabilities totalling US$130 946 147.

In a document presented to Energy and Power Development minister Simon Khaya Moyo, seen by the Independent, Zesa management argues that if no intervention is taken, especially on the proposed tariff increase, the power situation in the country could further deteriorate.

The document states that: "Zesa is technically insolvent as its debt has ballooned to US$1 billion. Zesa's debt to the South African power utility Eskom has ballooned to US$41 million, while it still owes Hydro Cahora Bassa of Mozambique about US$9 million. The country consumes about 1 600MW daily."

According to the document, state entities owe Zesa US$520 million, while government has managed to pay only US$150 million through Treasury Bills.

Zesa says government must urgently pay its bills so that it stays on its feet.

"The disbursement is crucial in the sense that it supports power supply reliability as the power utility will pay for its imports as well as coal supplies," the document reads.

"An immediate solution is that Zesa can be allowed to increase its tariff to achieve a break even."

Currently, electricity tariffs stand at 9,86c/kWh and were last received in 2011.

Zesa wants the tariff be adjusted by 1,5c/kWh by January 2018. The company is also open to have the tariff increase staggered between January 2018 and May.

A senior Zesa official told the Independent this week that the parastatal was waiting for a response from the minister.

The ministerial brief states that Zesa has legacy debts, outstanding liabilities and payroll costs in excess of US$40 million.

"These are loans that were used to finance projects in the power sector from multilateral and European bans and the debts are all due," the document says.

"Zesa is not creditworthy and it is now failing to fund its capital projects and that the biggest problem is that critical long-term projects have deliberately been financed inappropriately using short-term money."

In an interview last week, Zesa group chief executive officer Josh Chifamba said urgent measures are required to curb power supply threats.

"I have already engaged the Reserve Bank of Zimbabwe governor John Mangudya so that forex is availed to make sure that we pay for our imports," Chifamba said.

"The nation should not panic because we have put in place short-term measure so that power supply is not interrupted."

- Zim Ind

Tags: Debt, Zesa, Hike,
 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Stampede at August 1 killings commission of inquiry hearing

by Staff reporter | 17 October 2018 | 14 Views

Dangers of Ndebele and Shona radicalism and extremism in Zimbabwe

by Etiwel Mutero | 17 October 2018 | 22 Views

Europe to crack down on 'second passport schemes'

by Staff reporter | 17 October 2018 | 20 Views

Mutsvangwa President in waiting?

by Fanya Haraka | 17 October 2018 | 37 Views

Zimbabwe's great war

by Jealousy Dutiro | 17 October 2018 | 19 Views

Zimbabwe considers debt cancellation

by Staff Reporter | 17 October 2018 | 20 Views

Zimbabwe imports from SA up 17%

by Staff Reporter | 17 October 2018 | 27 Views

UK donates another 2.6 million US to the cholera fight

by Agencies | 17 October 2018 | 19 Views

Mnangagwa closes in on forex kingpins

by Staff reporter | 17 October 2018 | 33 Views

Chamisa's MDC slams ban of jerry cans at service stations

by Staff reporter | 17 October 2018 | 21 Views

MDC gala scheduled for October 27 in Harare at Gwanzura Stadium

by Staff reporter | 17 October 2018 | 25 Views

Zimra official nabbed for extorting $500 bribe

by Staff reporter | 17 October 2018 | 17 Views

'Enact law to deal with money changers'

by Staff reporter | 17 October 2018 | 22 Views

Jabulani Sibanda remains mum

by Staff reporter | 17 October 2018 | 21 Views

Japan back in Bulawayo after Mugabe departure

by Staff reporter | 17 October 2018 | 22 Views

ZSE drops $4 billion in a day

by Staff reporter | 17 October 2018 | 19 Views

Nedbank buying back shares from minority shareholders

by Staff reporter | 17 October 2018 | 21 Views

Grace Mugabe's son, Mushekwi ex-wife Luminista 'get cosy'

by Staff reporter | 17 October 2018 | 27 Views

Drive out touts, money changers

by Staff reporter | 17 October 2018 | 20 Views

'Army warns Mnangagwa' - Exclusive Report

by Itai Mushekwe | 17 October 2018 | 461 Views

'Frail' Chiwenga flown back home

by Staff Reporter | 17 October 2018 | 369 Views

Zanu-PF fraudsters jailed

by Simbarashe Sithole | 17 October 2018 | 210 Views

Afreximbank confirms $500m facility talks

by Staff reporter | 17 October 2018 | 137 Views

Esigodini residents stage demo over killings and violence

by Staff Reporter | 17 October 2018 | 107 Views

'Baba Jukwa' says Zimbabwe needs cleansing

by Staff Reporter | 17 October 2018 | 137 Views

Zimbabwe Army Commander hails traditional leaders' role in development

by Staff reporter | 17 October 2018 | 103 Views

Joram Gumbo denies any wrongdoing at Zinara

by Staff reporter | 17 October 2018 | 98 Views

New twist in Buyanga manager's case

by Staff reporter | 17 October 2018 | 56 Views

Zimbabwe Warriors on track

by Staff reporter | 17 October 2018 | 129 Views

New TV series for Bulawayo

by Staff reporter | 17 October 2018 | 88 Views

Mnangagwa to flush out economic saboteurs

by Staff reporter | 17 October 2018 | 135 Views

Zimbabwe govt notorious for over spending - senator Mwonzora

by Stephen Jakes | 17 October 2018 | 111 Views

Egodini mall developer creates WhatsApp platform for job seekers

by Staff reporter | 17 October 2018 | 81 Views

Bosso CEO warns card carrying members

by Staff reporter | 17 October 2018 | 79 Views

1 killed in Bulawayo drag racing crash

by Staff reporter | 17 October 2018 | 82 Views