ELECTRICITY tariffs will continue to be reviewed in line with inflation and exchange rate movements until they reflect the cost of production, a Cabinet Minister has said.
Last month, Zesa effected a 30 percent power tariff hike for its prepaid customers, with the cost of the 200-unit package used by many households rising from $870 to $1 127.
The power utility has struggled to fund power imports, retain experienced staff and service its distribution infrastructure owing to sub-economic tariffs.
Energy and Power Development Minister Zhemu Soda told The Sunday Mail recently that cheap electricity was no longer guaranteed.
“In order for us to achieve what we are envisioning, that is to provide adequate power and sustainable electricity, there is a need for tariffs to be reviewed regularly,” said Minister Soda.
“It is also imperative that power be sold at cost reflective tariffs, that way the producer is able to continue to offer and improve on the service delivery.”
He said charging sub-economic tariffs will result in a continuous decline in both quantity and quality of service.
“Movements in the exchange rate and inflation will continue to threaten the power utility’s viability if tariffs are not raised,” said Minister Soda.
“The long term effect being failure to maintain the grid.
“We cannot guarantee the nation of cheap electricity when it is not sustainable.”
In October 2019, Government introduced a tariff indexation formula that aligns power tariffs to movements in inflation and the exchange rate.
Under the system, tariffs are supposed to be adjusted periodically each time inflation and exchange rates move by more than 10 percent.