daniel chigunwe
Zvamaida Murwira
Senior Reporter
Competitive tariffs, guarantees on power purchases and availability of foreign currency as promised by the Government to independent power producers have started bearing fruit, with investors expressing interest in generating energy for the national grid, legislators have heard.
Legislators speaking at the marathon debate on the 2025 national Budget that ended early yesterday, spoke strongly on the need to end energy challenges and wanted Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube to provide resources to the Ministry of Energy and Power Development towards that end.
In his response, Prof Ncube told the National Assembly that the Energy Ministry’s mandate was largely a regulatory role and to provide an enabling environment for private sector power stations.
“The Ministry has, working with Treasury, put in place policies to encourage independent power producers to invest in the power sector.
“Most of the independent power producers are investing in the solar sector and they requested three things to be able to invest in this sector.
First, is an economic tariff and Government has increased the tariff, as you know to about $0,16c per kilowatt hour which is way above the level of profitability of $0,10c per kilowatt hour. There is easily an additional $0,06c that they could play with in building margin and profitability,” said Prof Ncube.
“Secondly, they requested a Government guarantee on the power purchase agreement such that if ZESA or ZETDC to be specific is unable to pay for the power, Treasury or Government should step in to pay for that power from the IPP provider.
“Finally, they also requested that there be a foreign currency access arrangement so that they can access foreign currency in order to service their loans abroad if they have borrowed money from abroad to invest locally or to invest in the equity when they want to pay dividends. That is called the Government Implementation Agreement and that agreement is in place and it is functioning well. We continue to fine-tune it.”
Since the tariffs were adjusted there had been several enquiries from investors who had expressed interest in energy.
“In terms of the quality of the transmission infrastructure, that again is under ZESA. If I can add something that maybe legislators would like to know, I have seen that since we increased the tariff for ZESA to 16 cents, we are seeing a lot of interest from private investors who want to partner with ZESA, including for transmission.
“They have actually signed an MOU with a foreign investor to invest in the transmission infrastructure and the additional generation capacity infrastructure,” said Prof Ncube.
He said there were some coal power stations which were coming up from private investments.
“Mining companies as well are generating their own power through coal power stations as well as solar facilities, if you look at PPC which is an industrial company. Look at Zimplats and Manhize, the iron and steel company is also looking at producing its own power,” he said.
Prof Ncube said one thing that had been weighing down Zesa is the rate at which some customers were defaulting in paying for electricity they were buying.
While almost all residential and small businesses have been on prepaid meters for some time, large industrial and mining companies with their more complex tariffs that largely see them paying for power rather than energy have still been paying in arrears.
“They also have a programme for improving the quality of the collection of user charges for electricity. In fact, I have been informed that in the next couple of months, their net metering programme will be fully in place and also the pre-payment programme for electricity will be fully in place because when you look at their accounts you find that there are a lot of defaulters in terms of payment for electricity.
“Just by dealing with the issue of defaulters, we will be able to raise enough revenue to make further investments in the sector,” he said.
During the debate on Budget votes for each Ministry, Prof Ncube made some adjustments to what he had initially appropriated for some Ministries following representations from legislators.
For example, he proposed an additional ZiG250 million to the Ministry of Primary and Secondary Education to help it to consolidate its rural projects such as feeding schemes among others.
There was also an additional ZiG120 million to the Ministry of Higher and Tertiary Education, Innovation, Science and Technology Development meant to improve the conditions of service for lecturers.
He also proposed an additional ZiG100 million for the Ministry of Justice, Legal and Parliamentary Affairs and ZiG50 million for the Ministry of Information, Publicity and Broadcasting Services.
