adminof a research on the country’s electricity tariff structures at the Confederation of Zimbabwe Industries Energy and Tariff Conference yesterday.
Eng Masawi said the “single-buyer model” is “unlawful” as it was meant to be transitional.
“Zimbabwe’s electricity sector is currently operating on a ‘single-buyer model’ which is monopolistic and the operating enterprises are all vertically integrated.
“This was initially meant as a transitional model to a more competitive model. The single-buyer model is one of the greatest impediments to the establishment of new power projects in the country,” he said.
Eng Masawi said the present system should be done away with and the provisions of the Electricity Act be implemented. He urged the relevant ministry to adopt the model prevailing in the petroleum industry.
Apparently the Ministry of Energy and Power Development (which oversees both the electricity and petroleum sectors) is operating a better model for the latter in which there is a regulator at the top — the National Oil Company of Zimbabwe — while having independent fuel suppliers and distributors.
The research also noted issues that need to be addressed in terms of the tariff structure that is being used by the Zimbabwe Electricity Supply Authority.
It was noted that although the Rate of Return (ROR) price determination model was standard in most countries across the world, Zesa needed to ensure that only “genuine expenses” should be accommodated into the electricity tariff.
The implicit assumption built in the ROR methodology is that infrastructure rehabilitation and development should be met from the returns on assets which is pegged at 8,5 percent of the net asset value. However, Zesa has often been accused of having a monopolistic paradigm that pushes costs to recover them through pricing.
Eng Masawi also said the tariff should reflect depreciation of assets, that is, for example power stations that are not in operation should be removed from the tariff structure.
Outgoing Confederation of Zimbabwe president Dr Joseph Kanyekanye said the cost-recovery pricing model was not ideal anywhere and that industry was suffering from the tariff hike implemented last year.
“The tariff hike was too high for industry, and we have since taken the relevant ministry to court. In November last year the Competition and Tariff Commission gave a court order to Zesa over the tariff but it was ignored,” he said.
Despite Zesa effecting a 51 percent tariff increase in September last year, there has been no significant improvement in terms of electricity output.
Online Reporter