By KETRA KALUNGA
By KETRA KALUNGA
ZESCO is renegotiating power purchase agreements with the Independent Power Producers (IPPs) following the substantive losses it has been making from the deals, says Energy Minister Matthew Nkhuwa.
Zesco has been buying power from IPPs at about 11 cents per kilowatt hour but selling it at five cents per kilowatt hour to customers.
Mr. Nkhuwa said in an interview that experts drawn from Zesco and Government were already negotiating with the private power producers.
“The power purchase agreements have already started being negotiated, we started negotiating these last year,” he said.
Earlier, Zesco corporate affairs manager, John Kunda said the difference in the buying and selling price represented a subsidy of about 6.7 per kilowatt-hour.
“We are buying power from various IPPs at prices ranging from eight cents per kilowatt-hour to 13.5 cents per kilowatt-hour, the buying price is higher than the selling to price,” he said
Dr. Kunda said for the power utility firm to break even, the buying price should be lower than the selling price.
He said that what Zesco was applying for from IPPs was a tariff that could give returns for investment not only for the company but to all parties involved.
Dr. Kunda also explained Zesco was looking at attracting private sector investment in the energy sector.
“Zesco is also suffering heavy losses as a result of subsidising domestic customers leading to the company accruing more debt to banks and independent power producers,” he said.
Dr Kunda said Zesco was vulnerable to foreign exchange rates and the tariff mismatches.
He said in as much as the cost of a new connection was borne by the customer, the power utility company was spending more on each connection.
“As an example that for a standard connection in Kalingalinga, whilst the customer pays K769, the total connection costs including duplex cable, a meter, and labour as well as transport may range between K4, 500 and K5, 000,” Dr Kunda said in an interview. Dr Kunda also said connection fees have not been adjusted since 2005 despite the increase in the cost of materials
