FINANCE Minister, Mthuli Ncube says government is reluctant to hike power tariffs, but it may consider a commodity linked tariff for mines.
Appearing before the parliamentary committee on Budget and Finance, Ncube told legislators that a tariff increase was highly untenable in the current environment and would only add to inflationary pressures.
“The pressure from Zimbabwe Electricity Supply Authority (ZESA) has been to increase the tariff but we have been reluctant to do that. We should hold that back otherwise we would have to add other subsidies to lower that. We are looking at other options. For instance companies that export say in the mining sector their tariff should be linked to the price of the commodity that they export. So there is need for some innovation in terms of pricing models from the Minister of Energy,” Ncube said.
“We are hoping that the re-bundling of ZESA into one entity begins to bear fruit then we can squeeze out the efficiencies which should translate to manageable rates. By addressing the efficiencies within ZESA we can reduce the inflationary impact of what we are seeing on the rates so we do not have to increase rates to cover up for those inefficiencies but rather put in place strategies for making the company more efficient.”
Power utility, ZESA, has been calling for a review of electricity tariffs by as much as 30% to reflect the rise in production costs following the progressive devaluation of the local currency since February.