ZNCC calls for lower electricity tariffs
THE Zimbabwe National Chamber of Commerce (ZNCC) has appealed to the Zimbabwe Electricity Supply Authority (Zesa) to reduce the electricity tariff for businesses and give the productive sector between six to 12 months grace period to clear their arrears saying this will support economic recovery.
In its recently issued 2024 State of the Industry Report, the business lobby group said the proposal was backed by a majority of industry leaders following Zesa’s call for all medium and large customers in the commercial, industrial, tourism, and mining sectors and institutions that are still on postpaid billing, to migrate to the prepaid billing platform.
The migration was supposed to be with effect from October 1, 2024. The power utility had said that industry, commerce, and mining sectors in the prepaid platform were expected to address the Zimbabwe Electricity Transmission and Distribution Company’s significant debt of over ZWG5,7 billion.
Industry, commerce, and mining account for 74 percent of this debt, with each sector contributing 50 percent and 12 percent respectively
Due to the debt, Zesa has been struggling to import electricity, and the supply challenges have been exacerbated by the low dam levels at Kariba Dam, which supplies water for electricity at Kariba Power Station.
Kariba Power Station
ZNCC has said the power challenge has been one of the factors that contributed to a decline in capacity utilisation at the same time increasing the cost of doing business for industries, as they tend to use other alternatives like generators that are expensive to operate.
Reasons for low-capacity utilisation levels varied with most respondents citing exchange rate distortions, low demand for goods and services, and power outages as the main reasons weighing down capacity utilisation, said ZNCC.
“Offer a grace period of 6-12 months for businesses to clear their Zesa debts to support economic recovery. This should include a postponement of the prepaid metering requirement to mid-year,” said ZNCC.
“Notwithstanding the need for cost-reflectivity as an end goal and desirability to attract independent power producers (IPPs) into the energy sector, consider reducing the electricity tariff cost per kWh from US$0,142 to US$0,09 per kWh for commercial users, to support sectors such as manufacturing, ICTs, and mining sectors.”
ZNCC further said there is a need to accelerate the revitalisation and expansion of the national electricity grid to increase its carrying capacity in anticipation of new energy projects expected to supply the grid by December 2025.
“This includes ensuring the grid is upgraded to effectively transmit energy from emerging renewable sources, such as solar and wind while minimising transmission losses,” said the business lobby group.
Meanwhile, ZNCC said capacity utilisation in most sectors decreased when compared to the previous year, 2023, citing exchange rate distortions, low demand for goods and services, and power outages as the main reasons.
The lobby group said in most service sectors as well as agriculture, capacity utilisation declined while in the mining and quarrying sector it marginally increased, particularly, for enterprises in gold and ferrochrome production.
“A total of 672 (38,6 percent) respondents indicated that capacity utilisation decreased in 2024 when compared to 2023, while 125 (7,2 percent) indicated that it drastically,” said ZNCC.
“About 461 (26,5 percent) reported that it increased while for 482 (27,7 percent) firms it remained unchanged.”
Zimbabwe National Chamber of Commerce (ZNCC).
According to ZimStat, the manufacturing sector experienced a 1,3 percent decline in capacity utilisation during the third quarter of 2024.
The statistics agency also attributed the decline to persistent challenges such as cash flow difficulties, electricity shortages, and uncertainty in the economic environment. -chroncile
