Govt should stop financing ZESCO’s major investments

Sat, 21 Jan 2017 14:25:30 +0000

By BUUMBA CHIMBULU

GOVERNEMNT should stop financing ZESCO’s major investments which today stand at K550 million from 2012 to give the parastatal chance to stand on its own feet, says Zambia Institute for Policy Analysis (ZIPAR) executive director Pamela Kabaso.

Dr. Kabaso said the move would allow the parastatal to raise its own funds through cost reflective tariffs.

ZIPAR executive director Pamela Kabaso said Government was currently spending colossal sums of money on financing ZESCO’s investment cost when the company could raise its own funding through a cost reflective tariff.

Dr. Kabaso told the parliamentary committee on budgetary implications of agriculture, fuel and electricity subsidies that the money Government was spending on ZESCO could be used on other needy areas such as education and health.

“During the 1st and 2nd republics, Government had a policy of providing cheap electricity which was viewed as a driver of economic activities. This meant that Government had to put in money to support maintenance and expansion of ZESCO’s assets,

“ZESCO was required to raise its own funds for maintenance and expansion of its generation capacity. However, from 1990s after the liberalisation, the country experienced a rapid increase in electricity demand. Zambia moved from a position of electricity surplus producer to deficit position,” she said.

Dr. Kabaso also urged Government to re-examine the electricity industry and declare relevant transmission lines common carriers and the same should be provided for the National Grid Code (NGC).

She observed that access to transmission lines rules currently by the Independent Power Producers (IPP) were discriminatory, hence discouraging investment in the energy sector.

Dr. Kabaso explained that reforms in the sector aimed at creating an established electricity trading market should be expedited.

“Players in the market should be able to buy and sale electricity unlike what is currently happening. Today, for IPP to sale its power to another company, they have to sell to ZESCO who had control of the transmission and distribution lines,” she said.

She said access to transmission lines with non-discriminatory rules governing the operation of the open access regime would inspire confidence in all players.

“The issue of cost reflective tariffs in this case would be dealt with through the negotiations between the parties involved,” she said.