Africa needs to reform its power utilities, says report

Mon, 26 Dec 2016 11:38:36 +0000

By BUUMBA CHIMBULU

 POWER utilities in developing African countries like Zambia need to be reformed as they are generally inefficient, according to the Mining Weekly report.

The latest edition of the publication says power utilities need to be reformed due to their financial difficulties and their failure to invest in new power generation capacity.

“The persistence of under-performance of the power sector in developing countries justifies calls for reform. Reforms should not just be aimed at achieving financial efficiency of utilities.

“They must target such outcomes as affordable tariffs, increased access to electricity and improved quality of service,” says the report.

It says that urgent reform in the energy sector is needed for sustainable future with load-shedding still a reality for Zambians, and national electricity consumption continuing to rise.

In the report, one reason cited for the less-than-satisfactory outcome of such reforms was that they were “ill-designed, without focusing on the long-term sustainability of the industry”.

Other reasons included weak competition, lack of an effective and independent regulator, and shortcomings in other areas such as political stability, local skills, guaranteed property rights and tax laws.

“Therefore, reforms in the power-market sector must be accompanied by reforms in the economy in general to provide an enabling environment.  “Dissatisfied with the overall performance of Zesco, especially during periods of power shortages, some stakeholders are still calling for radical reforms such as unbundling and privatization of Zesco,” reads the article.

The need for a reformed energy sector was clearly spelled out in the November 2016 Budget speech by Minister of Finance, Felix Mutati.

Mr Mutati said Government would consider several options to improve both the technical and commercial efficiency in the electricity supply industry.

He also spoke of the need to move towards cost-reflective tariffs to attract more private-sector participation in the industry. “This, however, does not mean that consumers should end up paying for inefficiency. “The Government would also review the overall structure, governance and operations of the sector, including generation, transmission and distribution,” he said.