Stop unsustainable Zesco debt accumulation
By KETRA KALUNGA
The rate at which Zesco is accumulating debt due to expensive electricity from Independent Power Producers (IPPs), has become unsustainable and should not be allowed to continue, says energy expert, Johnstone Chikwanda.
Mr. Chikwanda said to prevent the accumulation of debt, the government should put in place measures that would facilitate an optimal level that combines both sales from Zesco power plants and those of IPPs.
He said in an interview that taking such a step is important because even with increased own generated electricity, Zesco would still remain trapped with IPP electricity due to the long-term power supply agreement (PSA) signed.
“And most of the PSAs have a standard “Take or Pay Clause” which imply that even if you have enough of your own generated power, you still have to pay the IPPs whether you like it or not,” he said.
Mr. Chikwanda said Zesco’s debt burden, which stands at $3.5 billion, cannot be dismantled without the intervention of the shareholder, the government.
He said the statement by the government that it would restructure the over $400 million which Zesco owes to Maamba Collieries is commendable and should be supported by the various stakeholders.
“I would like to call upon various stakeholders to support the initiatives which government intends to engage in order to restructure the Zesco debt burden and support the power utility company,” he said.
Mr. Chikwanda said most African power utility companies have found themselves trapped in terrible debt burden due to many reasons which include factors beyond their control especially that the product they sell has implications on social-economic issues.
He is however hopeful that with support from both the government and various stakeholders, the unsustainable debt accumulated by Zesco would with time be solved.
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