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dam-l Zim power hikes
>ELECTRICITY HIKE PUTS NEW PRESSURE ON ZIMBABWE ECONOMY
>HARARE July 30 1998 Sapa
>
> Zimbabwe's Electricity Supply Authority (Zesa) on Thursday
> announced a 37 percent hike in electricity charges, placing even
> more pressure on the country's battling economy.
>
> The increase was blamed on additional operating costs of ZD1,4
> billion (R467 million) following the 45 percent crash in the
> currency last year.
>
> Zimbabwe buys 40 percent of its power from neighbouring countries
> and 70 percent of the country's ZD5,8 billion dollar (R1,9
> billion) debt is paid out in foreign currency.
>
> The increase in electricity charges, which will be backdated by a
> month, will add new strains to the country`s economic crisis.
>
> It is expected to be reflected almost immediately in boosted
> inflation, which reached nearly 30 percent last month.
>
> According to observers the hike will worsen widespread discontent
> against President Robert Mugabe`s government and increase the
> chances of another outbreak of countrywide food riots.
>
> Eight people were killed in January in urban violence after the
> price of maizemeal went up by 21 percent.
>
> "The new tariffs will mean increased costs of production and those
> prices will obviously be passed on to the consumer," said Zimbabwe
> National Chamber of Commerce president Nhlanhla Masuku.
>
> Jerry Grant, deputy director of the Commercial Farmers' Union,
> whose 4200 members produce 85 percent of formally traded
> agricultural output, warned the move could lead to prices
> skyrocketing. "The next thing is that fuel will go up," he said.
>
> Zimbabwe's fuel bill, all of it imported, has soared since the
> currency crash, but the government has refused to allow the state-
> owned fuel company to raise its prices, and reports say it is
> losing ZD3 million (R1 million) a week.
>
> Doug Verden, chief executive of the Zimbabwe Chamber of Mines,
> said the tariff increase was bad news all round.
>
> Gold, nickel and chrome, the country's main mineral exports, were
> under pressure from a slump in world prices.
>
> Power contributes about 18 percent to most mines' input costs, he
> said. "It's not something we can cut down on. All we can do is
> hope prices will increase," Verden said.
>
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Lori Pottinger, Director, Southern Africa Program,
and Editor, World Rivers Review
International Rivers Network
1847 Berkeley Way, Berkeley, California 94703, USA
Tel. (510) 848 1155 Fax (510) 848 1008
http://www.irn.org
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