Zesco tariff hike to reduce load shedding-Mundende

Mon, 10 Apr 2017 11:49:33 +0000

 

By BENNIE MUNDANDO

THE Zambian electricity sector needs regular tariff adjustments in order to secure reliable electricity and reduce load shedding, Zesco managing director Victor Mundende has observed.

Commenting on the proposed tariff hike by Zesco by 75 percent, Mr. Mundende said increasing electricity tariffs had huge benefits to the country such as increase in national access to electricity thereby improving the standards of living of the people.

Mr. Mundende said in order for Zambia to attract investment from the private sector in all the economic sectors, there was need for the country to charge cost-reflective tariffs that would trigger the desired investment towards power generation.

He noted that investments in various capital projects for power generation would also lead to increase in access to electricity thereby minimizing the use of other energy sources that had a negative impact on the climate.

He noted that regular tariff adjustments by Zesco were inevitable as they were a key to improving generation, transmission and distribution infrastructure required to meet demand for electricity to end load shedding.

“The Zambian electricity sector needs regular tariff adjustments in order to secure reliable electricity and reduce load shedding as well as increase national access to electricity thereby improving the standards of living for the people. This also attracts investment from the private sector in all the economic sectors and increase access to electricity to minimize use of other energy sources that impact the climate adversely.

“Zesco needs regular tariff adjustments in order to invest in the new generation, transmission and distribution infrastructure required to meet demand for electricity to end load shedding. The consequences of not having tariff adjustments include under-investment in the energy sector, insufficient capacity to support accelerated growth in the economy, unreliable quality of supply of electricity and perpetual load shedding,” Mr. Mundende said.

He explained that Zesco will purchase 4,543GWh of energy from Independent Power Producers (IPPs) in 2017 at a total cost of US$ 502 million and that the average cost of these purchases is US 11.04/kWh, against an average selling price of US 3.3/kWh

He said as a result, the high cost of power from IPPs needs to be supported by an adjustment in tariffs so that Zesco could continue to make these purchases adding that while Zesco received support from the Government for purchases of power from IPPs and imports in 2015 and 2016, it now expected tariffs to be cost reflective as this level of support was not sustainable hence the proposal for an upward adjustment of tariffs.

“Zesco has submitted an application to the ERB for a 75 percent tariff increase in 2017 with an initial 50 percent increase effective 1st May 2017 and an additional increase effective 1st September 2017 leading to the full 75 percent increase,” he said.

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