Let’s support power tariff hike

Thu, 11 May 2017 12:39:21 +0000

SOME Zambians must be gnashing their teeth on hearing that the Energy Regulation Board (ERB) has approved the proposed 75 percent increment in electricity tariff which ZESCO has been craving for to bail out the power utility company.

Those opposed to the new astronomical hike must feel that the ERB has pulled the carpet under their feet by appearing to show that the recent consultative process over the issue was necessary when the die was already cast.

They are justified to feel cheated because the ERB has made no attempt to adjust the size of the increase, its timing or do anything to try and meet them half way. The ERB announcement is exactly the way Government argued their case.

Whatever the case we want to appeal to Zambians to support the decision to increase ZESCO tariffs because the company, together with the country, were sinking under the burden of electricity subsidy.

President Edgar Lungu has been leading the campaign to persuade Zambians to support Government in its attempt to increase the tariff because the massive subsidy Government was paying for power imports had become unsustainable.

For example, ZESCO will this year alone import electricity from Independent Power Producers (IPPs) at a total cost of US $502 million in order to meet local demand. This means the company is purchasing electricity at US11.04/kWh and selling it to Zambian consumers at a meagre US $3.3/kWh.

The difference in price is the loss ZESCO makes on the sale of power which the Government must cover up in form of subsidy. This is despite the fact that Zambians have been calling for the scrapping of subsidies which are distorting the economy and driving Government deeper into debt.

There is no doubt that increasing electricity tariffs to a reasonable level has huge benefits for the country and the consumers in general. In the first place cost reflective tariffs will attract massive foreign direct investment into the sector which will enable the country export power to earn foreign exchange and, more importantly, create jobs.

The coming on stream of projects like the 1,600 MW US $4 billion Batoka hydro power scheme and the US $2 billion 750 MW Kafue Gorge Lower will transform this country from a net importer of electricity to feed the mines and industry to a power exporting nation.

The 75 percent tariff hike, which does not affect the pocket of the householder, will ensure reliable electricity all the time and reduce the hated load shedding which nearly bankrupted many businesses during the 2015-2016 power crisis.

As ZESCO and Government have always advocated, regular tariff adjustments are inevitable to pay for the power generation, transmission and distribution infrastructure needed to meet the demand for a fast growing economy such as ours. This not only enhances the living standards of the people but also minimizes the country’s reliance on environmentally unfriendly energy sources.

What is most important is that Government has not tampered with the cost of electricity to the ordinary domestic consumer. They will continue paying the same rate as before. In fact the band has been increased from 100 to 300 units. This must be a huge relief to the ordinary Zambian who has in fact benefited more from the tariff hike.

We also wish to assure the Mineworkers Union of Zambia, whose leadership has been the most outspoken opponent of the 75 percent tariff hike, that they have nothing to fear or worry about. There will be no massive lay-offs of the workforce as a result of the new tariff. The mine owners would have said so.

If fact the new tariff is intended to avert the power crisis of the last two years which nearly brought the mining industry to its knees. As President Lungu put it during the Labour Day celebrations in Lusaka two weeks ago, Zambians, including the miners, must be ready to pay a cost-reflective tariff or risk the closure of the mines, with its ghastly consequences.

Which option would MUZ choose?