Fixed charge benefits the rich, Zesco told

Fri, 12 May 2017 12:56:52 +0000

By SANDRA MACHIMA

THE Policy Monitoring and Research Centre (PMRC) has asked Government and ZESCO to consider removing the “fixed monthly charge” to alleviate the impact on the poorest households in view of the new electricity tariff.

PMRC executive director Bernadette Deka said the fixed monthly charge was currently only benefiting wealthy households.

“PMRC’s research shows this rate leads to cross subsidisation of wealthy households and under usage by poorer households, effectively forgoing 100kWh of electricity,’’ she said.

Ms Deka said to improve the way the subsidy was targeted, there was need to replace the current universal lifeline policy with a targeted usage and hardship based lifeline tariff policy that is only available to the poorest households.

She said the current lifeline policy extends subsidies to all electricity users regardless of their income status, thus the majority of the benefits accrue to the wealthiest households.

Ms Deka said given how unfair the current subsidy was, the Government’s aim of reforming subsidies by the end of 2017 was the right move, saying care also needs to be taken to protect the poorest consumers when subsidies were cut in that electricity subsidies benefit the rich more than the poor.

According to a new research commissioned by Policy Monitoring and Research Centre, the richest Zambians currently receive nearly five times more in subsidies than the poor.

She said Government should also consider improving the way the subsidy was targeted by replacing the current universal lifeline policy with a targeted usage and hardship based lifeline tariff policy that was only available to the poorest households.

Ms Deka said the current lifeline policy extends subsidies to all electricity users regardless of their income status.

The analysis shows that wealthiest 20 percent of the population receive approximately 70 percent of all subsidies, while the poorest 50 percent of the population receive less than 3 percent of the electricity subsidies.

Poorer households consume less electricity, average consumption for the bottom 50 percent of households is 226 kWh each month, compared to 312 kWh for all households.

“Despite this, poorer households spend more of their income on electricity – so removing subsidies has a higher proportional impact on the poorest households (it could increase expenditure by up to 13 percent of income of poorer households, compared to 6 percent for the wealthiest households),’’ Ms Deka said.