We need independent power producers

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ZIMBABWE has been experiencing up to 19 hours daily of electricity cuts since last year — a development that has affected industry, commerce and the common man.

The situation is terrible to a country battling to revive a comatose economy because power is the centre of gravity that holds the success of any economic turnaround strategy.

The centrality of power supply in economic recovery is as clear as day and it is encouraging that the Zimbabwe Energy Regulatory Authority (Zera) has taken many initiatives to boost power generation, among them, licensing independent power producers.

The country has for years been importing electricity to augment internal generation and also introduced load shedding — two devils industry, business, miners and even consumers would not want to grapple with.

Unfortunately, the country was left with no choice, but to adopt the two choices simultaneously and the result is that our products are less competitive on the international market as it cost more to heat barns using generators than electric power.

Either way, the consumer, be it a farmer, manufacturer, retailer or miner, loses out under the current setup.   Opening up the power sector is the only appropriate move and it’s good that Zera embraced this approach.

The only downside to liberalisation is that it pushes up cost of utilities and potential investors regard the current electricity tariffs regime for power as low.

Investment into power supply requires huge capital outlay and results may be very slow in coming and this explains why State enterprises have monopolies in this sector all over the world.
However, given our failure to meet internal demand, the only way left is to fully open up the sector.

Unlike in cases where State enterprises have a monopoly and are the sole power suppliers, opening up the sector entails higher tariffs and business, farmers, manufacturers and miners should be prepared to pay the cost.

While there are persuasive arguments against the entry of private players in this sector, the track record of power suppliers in the developing world has not assisted this line of thinking, but instead prepared the consumers to pay dearly for available electricity than low tariffs for something none existent.

For power users, the high cost could be a necessary evil as maintenance of the status quo would see the economy trapped in a web which it may not be able to disentangle itself from.

Consumers are likely to make a quick adjustment to any price variations as most have already been relying on diesel and petrol generators as backup.

The government should open up more to new independent power producers as the first step towards sustainable economic recovery.

 

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