Govt launches mechanism to determine power tariffs adjustments

Fri, 14 Apr 2017 11:09:26 +0000

By BENNIE MUNDANDO

THE proposed electricity tariff adjustments by Zesco has attracted a lot of stress from stakeholders due to a bureaucratically way of negotiations, says Energy Minister David Mabumba.

Mr Mabumba said there was therefore need to find a new methodology on how they can be determined through the electricity Cost of Service (CoS) study.

And Energy Regulation Board (ERB) executive director Langiwe Zulu has observed that the CoS study will help ease up challenges in coming up with tariff adjustments by Zesco as they will be based on empirical evidence of the prevailing situation.

Speaking during the launch of the CoS at the ERB offices yesterday, Mr. Mabumba noted that while there was a lot of resentment from stakeholders in the sector regarding the proposal by Zesco to increase tariffs by 75 percent, tariffs in Zambia were not cost effective.

He noted that investment in the sector had hit a snag as much of Zesco’s power generation, distribution and supply depended much on government subsidy.

He said the Ministry of Finance did not have fiscal space to continue financing the power-utility company hence the need to come up with a long-lasting solution.

“This issue of tariff adjustment is so stressing because everyone wants their views to be heard by coming up with all sorts of reasons to justify their view points but then truth is that our tariff regime in Zambia is not competitive and that is what has stalled investment in ten sector,

“I am very happy today to launch this study because I believe we need empirical evidence which will help us to evaluate cost form production to supply so that tariffs become cost-reflective as opposed to this bureaucracy where we have to negotiate all the time,” Mr. Mabumba said.

The study, which was funded by the African Development Bank (AfDB) for a period of 12 months, will be conducted by Economic Consulting Associates (ECA) from the UK.