CZI Argues USD Electricity Billing Should Match Forex Earnings For exporters, Local Deposits
The Confederation of Zimbabwe Industries (CZI) wants ZESA Holdings’ US dollar electricity billing to be matched to the proportion of foreign currency sales because businesses have different mixes of local currency and forex earnings.
The Herald reported that the Zimbabwe Electricity Transmission and Distribution Company (ZETDC), a subsidiary of ZESA Holdings, announced a new US dollar power tariff of US12.21c/kWh for all exporters.
ZETDC will charge US10.63c/kWh for other foreign currency earners.
Previously, most customers paid in Zimbabwe dollars, under a stepped billing system which entailed that users paid tariffs in line with the amount of electricity used.
Only a few exporters/partial exporters, including miners, paid for electricity in forex.
CZI says ZETDC’s tariff for exporters was way above the regional average of US11.7c/kWh, as per data from the Southern African Power Pool (SAPP).
It also said companies were being levied different power tariffs for different times of off-peak consumption, which resulted in an effective tariff rate of US13,4c/kWh. CZI said:
Additionally, the computation of the MD (Maximum Demand) charge of US$5.71 per unit kilowatt, which most industrial users incur adds to the cost of production.
According to CZI, ZETDC indicated that the new tariff regime would be backdated to 1 October 2022 for Maximum Demand (MD) customers and 14 October 2022 for the rest of the consumers.
For CZI, 100 per cent USD billing is unfair for businesses that were non-exporters as ZETDC does not consider foreign currency sales and export levels, among other considerations. It said:
It is key that ZETDC bills be matched to local versus forex sales rations as the Zimbabwean dollar is legal tender and refusing to accept it from customers is illegal under SI 127 and other regulations.
Similarly, the auction rate should be used as the reference point in terms of conversion to local currency in bill payment as is the case with product pricing.
CZI argued that the settlement of electricity bills in foreign currency should take into account foreign currency retention levels for exporters and local deposits. It said:
Currently, consumers must find supplementary foreign currency to settle bills in foreign currency.
The current level of retained forex is acting as indirect taxes on businesses due to the misalignment between the formal and the widely quoted market exchange rates used to source supplies.