Diffuse ZESCO tariff uproar

Fri, 19 May 2017 10:38:43 +0000

THE fear that has gripped the nation since the Energy Regulation Board (ERB) approved the Zambia Electricity Supply Company (ZESCO) proposed new electricity tariffs is due to misinformation arising from lack of sensitisation to consumers and the general public.

It is clear that the larger percentage of ZESCO customers do not understand the implication of the two-phased tariff adjustment with 50 percent having been effected on 15th May, 2017 while a 25 percent in September this year.

This lack of dissemination of such vital piece of information justifies people’s anxieties on how the newly approved tariff hikes will affect their purchasing power.

Why did ERB approve 200 kWh as opposed to 300 kWh? Does this benefit ordinary citizens or not?

It is public knowledge that ZESCO had applied to the ERB to increase the Lifeline tariff band from 100 kWh per month to 300 kWh. However, after due consideration of ZESCO’s application and taking into account all submissions from the public, the ERB approved the Lifeline tariff band from 100 kWh to 200 kWh.

According to ERB, the decision to reduce the applied Lifeline tariff band was arrived at after careful analysis of how much ZESCO units a lower bracket income household would afford to purchase for basic usage.

The decision the energy regulator made was purely to safeguard the interests of the poor Zambians, and it is unfair to demonise ERB for this.

Take for instance, a poor family that spends K50 per month would purchase 140.71 ZESCO units which means that it is not affected by the new tariff hike as it falls within the approved 200 kWh Lifeline tariff band which is chargeable at the old rate.

On the other hand, had ERB approved the 300 kWh ZESCO applied for, it meant that a customer who spends K50 per month would have only managed to purchase 49.58 units. Under this band, the units could have reduced because ZESCO had equally applied for the fixed monthly charge component of the tariff to be increased by 75 percent, from the current K18.23 to K31.90.

The ERB rejected this proposed increase in the fixed monthly charge and only approved the 200 kWh which means that the monthly fixed charge still remains at the old rate of K18.23.

Certainly, the rationale behind this decision must be appreciated as it is meant to shield households in the lower income groups who cannot afford to purchase power at the newly approved ZESCO’s tariff which only applies when a customer purchases more than 200 kWh.

Simply put, the poor will not be affected by the new tariffs in the sense that the 200 kWh is not only affordable but also adequate for daily basic use to power up simple electrical appliances such as fridges, television sets, radio, charging of mobile phones and lighting.

Given this scenario, it is clear that a household that uses more than 200 units per month can afford to because it needs to power up other electrical gadgets that consume too much power such as geysers, cooking stoves, heaters, pressing iron, hence it would be unfair to let the poor share the same burden with the rich.

Has ZESCO increased the electricity tariffs for the mines by 75 percent?

There is a general understanding that tariffs in Zambia are below cost mainly as a result of the higher costs associated with the cost of power from new plants and imports from regional sources. In this regard, ZESCO has been engaged in negotiations with its mine customers to begin migrating applicable tariffs to cost reflective levels.

And arising from the negotiations, the average mining tariff was determined to be US$c 9.3 kWh which was effective from 1st January, 2017. However, mining customers agreed to support the cost of service study that the ERB will undertake in 2017 which would see the tariffs adjusted accordingly.

We urge ZESCO to scale up sensitisation activities and explore various avenues through which to engage with its affected customers to allay fears due to skewed public opinion.