Wed, 12 Apr 2017 06:16:45 +0000
By BENNIE MUNDANDO
THE Mineworkers Union of Zambia (MUZ) does not support the 75 percent electricity tariff increment that Zesco is proposing because it will have an adverse effect on the mines, says president Chishimba Nkole.
Mr Nkole said that some companies may be forced to reduce on its workforce to cope with the rise in the cost of production.
Mr Nkole told the Daily Nation yesterday that his union will not support such a move as it would create more problems on the mines.
He feared that if implemented, the increase in tariffs may force companies to downsize their workforce to cope with the increase in the cost of production.
He said the union was put in a precarious situation in 2015 and 2016 where, instead of fighting for decent salaries for its members, it spent more time in negotiations with the mines not to offload workers due to the power deficit that hit the country owing to low water levels for power generation.
“We will not support any tariff adjustment because we are still alive to what happened in the mining sector in 2015 and 12016 where we spent more time negotiating with mines not to offload workers owing to the power deficit that hit us instead of negotiating for better wages. Now we are faced with a similar situation,
“Government should not under-estimate the impact of such a decision because many companies may be forced to close and that means we will have to go back to negotiations to keep the jobs on the mines,” he said
Mr Nkole said that mines and stakeholders must look at reducing the unit cost because the planned increment will push the cost of production.
He said even Zesco’s justification that the increment will be done in phases did not avert the looming challenges ahead as Zambia has had frequent tariff increments within a short period of time.
“We also need to look at the performance of our economy. We have incurred a number of frequent tariff increments within a short period of time and that is not conducive for investment in various sectors of the economy,
“Yes, we know that we need cost-reflective tariffs to invite meaningful investment in the sector but it is important for us to also look at other options because these exorbitant tariff increments are prohibitive and may create more problems for the mines,” he said.
Zesco has applied to the Energy Regulation Board (ERB) for a 75 percent tariff increment this year to be implemented in two phase with the first adjustment accounting for 50 percent effective May 1, and another 25 percent planed for September 1.
For tariffs in the mining sector, Zesco is said to have engaged in negotiations with all mining companies and that through these negotiations, an average mining tariffs of US 9.30 cents/kWh has been agreed upon and were expected to be effected from January 1 until the completion of a new Cost of Service study (CoS) by ERB.
Zesco said the proposed upward adjustment of electricity tariffs was necessitated by the prevailing economic conditions as well as the need for investments in the sector aimed at increasing generation capacity to meet growing demand for power.
