Consider the poor in ZESCO’s tariff hike – JCTR

Fri, 14 Apr 2017 11:20:33 +0000

By SANDRA MACHIMA

THE interests of the poor should guide the final decision on proposed electricity tariff hike by the power utility company, Jesuit Centre for Theological Reflection (JCTR) media and information officer Tendai Posiana has said.

Ms Posiana said ZESCO’s migration to cost reflective tariffs would unarguably cut down Government electricity subsidies and reduce Zambia’s budget deficit.

She said it was estimated by the World Bank that the electricity subsidy costs Zambia on average US$26 million a month since September 2015, saying that was a huge burden on government coffers.

However, JCTR cautioned that an increase within the six month period as currently being proposed may strain the poor indirectly as well as make Zambia’s business environment unfavourable by raising the cost of doing business.

Ms Posiana said JCTR proposed that the initial increment be reduced from 50 percent to at most 40percent and that the tariff hike period be stretched to a period of 1 to 2 years to smoothen the impact and allow both the businesses and citizenry to adjust accordingly.

“In addition, JCTR asks that issues previously raised on ZESCO’s operational inefficiencies such as the huge wage bill as compared to that of actual service delivery and large electricity subsidies to employees be addressed to remove these costs from the real cost of providing electricity,” she said.

In August 2015, ZESCO made an application to the Energy Regulation Board (ERB) for an average tariff hike of 187 percent which was approved but later suspended in January 2016, and following various consultations, ZESCO has again made an application to ERB announced on 26th March, 2017 of a reduced percentage of 75 percent.

She said that was in an effort to ensure cost reflective tariffs that attracted the required revenue for adequate service provision as well as investment in the energy sector, and therefore, the effects of this proposed increment was twofold; with benefits and disadvantages.

Ms Posiana said reflecting on its March 2017 Basic Needs Basket, the JCTR noted that for an average family of five living in Lusaka, the cost of living remains high for most households.

According to the JCTR Basic Needs Basket, it has increased from K4, 918.76 in February 2017 to K5, 017.09 in March 2017 for a family of five in Lusaka.

She said an increase had been mainly due to the rise in cost of food and essential non-food items like charcoal which has increased from K131.67 to K171.67. Kapenta has also increased from K179.5 to K181.05 and beans has increased from K33.5 to K40.1.

Ms Posiana said with the high cost of basic needs in mind, an increase in tariffs on electricity was worrisome because of its potential to further push up these costs.