Excessive tariffs stall independent power projects

The excessive tariffs being imposed on Independent Power Producers (IPPs) by several government departments are preventing energy projects from taking off, an industry expert has said.

Zimbabwe, whose current power generation capacity can only meet half its peak electricity demand of 2 200MW, needs IPPs to plug in the gap. The Zimbabwe Energy Regulatory Authority (ZERA) has licenced 22 IPPs so far, but 14 of those are not operational.

Great Zimbabwe Hydro director Oswell Chakwanda said that the charges being levied were making some of the projects unviable.

Zimbabwe’s water authority (ZINWA) charges a 10 percent royalty on gross revenue for non-consumptive water usage which is considerably higher than the regional comparative.

The Environmental Management Agency (EMA), on the other hand, requires an upfront fixed charge of 1.5 percent of the project cost.

“Most of the projects are actually bankable, but the problem is the tariffs. At 10 percent of gross revenue the project becomes unbankable,” Chakwanda.

“The EMA fee, which is supposed to be paid upfront before you even start any generating, is also too high.”

Great Zimbabwe Hydro was licensed in 2010 and plans to set up a five megawatt plant on Lake Mutirikwi in Masvingo. It is jointly owned by a Zimbabwean company, MOL, and its South African partner, New Planet.

Chakwanda urged a review of the tariffs, which he said would enable IPPs to take off in under 12 months after being licensed.-The Source

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