Ex-ZESA exec: Tariff cap cripples Zimbabwe utility

A former Zimbabwe power industry executive says the government should remove tariff constraints on the state power utility to let it raise sufficient money to boost flagging domestic generation.

Zimbabwe Electricity Supply Authority (ZESA) has struggled to produce electricity at its two main thermal and hydropower plants due to a critical shortage of cash to repair damaged equipment, which has led to frequent power cuts for consumers and industry. Last year, ZESA said the government of Iran would help it upgrade the 620-MW Kariba South hydroelectric project and increase output at a cost of US$250 million.

The government-owned utility has said it is required to charge uneconomic tariffs as the government seeks to keep a lid on spiraling inflation.

Addressing an annual congress of Zimbabwe’s main industry body, former ZESA Chief Executive Simbarashe Mangwengwende said “inappropriate regulation,� including the low consumer bills, had kept investors away from ZESA, leaving the cash-strapped government with the sole burden of keeping the utility running.

Erratic power supplies have piled pressure on local industries struggling to stay in business in the face of an eight-year economic recession critics blame on President Robert Mugabe’s government.

“There is a myth that energy supply costs are high and are a major source of inflation. That is why we then end up with inappropriate regulations that prevent investments,” Mangwengwende said. “The result is that we have over-dependence on an investor with limited resources for investments.”

He said a short-term solution would be to allow ZESA to run as a business, which he said would end load-shedding.

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