HomeIndustry SectorsFinance and PolicyZimbabwe to adopt energy mix-based tariff structure

Zimbabwe to adopt energy mix-based tariff structure

The Minister of Energy and Power Development, Joram Gumbo, has revealed that government is planning to adopt an energy mix-based tariff structure as opposed to the prevailing commodity-based tariff for mining companies to ensure production efficiency.

A commodity-based tariff is the one which is linked to the commodity prices whereas an energy mix-based tariff considers all forms of energy and then determines the overall average tariff, reports the Standard.

The energy mix-based tariff allows cost recovery for a utility so that it remains profitable and commodity-based tariff is used to support industry in times of difficulty.

“Going forward, government intends to adopt an energy mix-based tariff structure as opposed to the prevailing commodity-based tariff for the mining companies,” Gumbo said.

The minister said there is a need to ensure that the energy industry continues to operate efficiently and effectively by providing adequate and reliable energy through charging of cost-reflective tariffs.

“Currently, the mining sector consumes about 20% of the total national electricity demand and value addition requires investment in smelters which require more energy. This is critical as more value is created on the country’s minerals,” he said.

Tariff structure

The Standard reported that miners have been urging national power utility, Zesa Holdings, to reduce its electricity tariffs in an effort to boost the country’s mineral output.

However, Gumbo said Zesa could not continue supplying power at lower than its cost of production. Read more: Zimbabwean IPPs seek licenses to produce electricity

“It is important to note that imports from regional utilities are very costly and the costs of production from thermal power stations are very expensive due to old age. Realising that government alone cannot win the war to provide electricity, the sector was opened for private sector participation in electricity generation,” he said.

Energy efficiency programmes

Gumbo pointed out that there are other opportunities for mining companies to invest in the energy sector products especially energy storage through the beneficiation of lithium to lithium ion batteries.

“Investments into new technologies include the coal-to-liquid fuels and coal bed methane for power generation. There is room for the mining companies to participate in power generation through registering as independent power producers for own use and supply excess into the national grid,” he said.

“Mining companies should also participate in energy efficiency programmes to reduce energy consumption,” he said.

He said the provision of adequate, reliable and cost-reflective energy will remain key as the country moves towards attaining a middle-income economy by 2030.

Babalwa Bungane
Babalwa Bungane is the content producer for ESI Africa - Clarion Events Africa. Babalwa has been writing for the publication for over five years. She also contributes to sister publications; Smart Energy International and Power Engineering International. Babalwa is a social media enthusiast.