Friday, August 04, 2006

Low tariff cripples Zim power utilities

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

The Zimbabwe Electricity Supply Authority (ZESA) has struggled to produce electricity at its two main thermal and hydro plants due to a critical shortage of cash to repair damaged equipment, which has led to frequent power cuts for consumers and industry.

The wholly government-owned company, the sole provider of electricity in Zimbabwe, has said it is required to charge what it says are uneconomic tariffs as the government seeks to keep a lid on spiralling inflation.

On Thursday power expert Simbarashe Mangwengwende, a former ZESA chief executive, said that "inappropriate regulation", including the low consumer charges, 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 told an annual congress of Zimbabwe's main industry body.

"The result is that we have over-dependence on an investor with limited resources for investments," he told the meeting in Zimbabwe's second city of Bulawayo....

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