HomeBusinessIPPs set to join the power supply sector

IPPs set to join the power supply sector

INDEPENDENT Power Producers (IPPs) will soon be afforded the opportunity to enter the power supply sector in order to increase the country’s power generating capacity, an official with the Zimbabwe Energy Regulatory Authority (Zera) has said.

REPORT BY KUDZAI CHIMHANGWA

This will be done when authorities complete the current cost of supply study aimed at offering competitive tariffs.

Zimbabwe last carried out a cost of supply study in 2004, which reflected very low tariffs that were not feasible for private sector participation.

The country’s tariffs have remained problematic for investors, as they need to sell power at a price that allows them to break even and make profits, hence the need for the cost of supply study.

Zera chief executive officer Gloria Magombo told Standardbusiness that the study would be completed by the end of June this year, in light of the authority having received feedback after stakeholder consultations.

She said the study was practically complete and it should be going to the board for final discussions.

“Over the years we have started increasing tariffs towards cost reflectivity. This cost of supply study will give us a measure of where we are in terms of cost reflectivity versus the tariffs that we have in the market,” Magombo said.

Magombo said the authority would develop an implementation plan after the study.

She pointed out that an IPP policy framework was still being developed in conjunction with the government, as well as through close collaboration research institutions.

“The essence of private sector participation is tariffs, investment incentives, and availability of funding. On the tariff side, I think we have moved significantly, but these other factors could be major impediments.

For such big projects for short- term funding, the tariffs will become really expensive, especially at the beginning of the project,” said Magombo.

The authority has already issued out more than 12 licences for various projects including mini hydro plants commissioned to generate 2, 7 MW at Pungwe in the Eastern Highlands.

The Zambezi River is the only resource available to Zimbabwe for the generation of large-scale hydropower with a potential of 18 600GWh per annum, while hydro energy potential from internal dams and rivers is about 88,4 GWh per annum, according to the authority.

Zera is a body established in terms of the Energy Regulatory Authority Act.

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