Tue, 28 Mar 2017 10:25:33 +0000
By CHINTU MALAMBO
ELECTRICITY tariffs may go up by 50 percent with effect from 1st May 2017 and an additional 25 percent on 1st September 2017 – meaning the tariffs may rise by 75 percent within four months – the power utility company ZESCO Limited announced yesterday.
Zesco says the 75 percent tariff increase was intended to attract investment in power generation and also ensure that the State-owned monopoly raises the money to import and purchase the shortfall from local as well as foreign independent power producers in the region.
Explaining the new tariffs to the Daily Nation yesterday, Zesco spokesperson Henry Kapata said the current electricity tariffs in Zambia were not cost reflective for all customer categories, hence the need to gradually adjust to cost reflective ones for all the retail and mining customers.
“The cost of production of electricity from the last time we increased tariffs is not the same and many other logistics in the process of providing the services are not the same and so you can only attract both local and foreign investment in this sector if tariffs are attractive and cost reflective.
‘‘Just to upgrade Musonda Falls power station from 5 to 10 megawatts, it costs us US $45 million and if someone under maximum demand is consuming between 2001 to 7500 kva and is paying K41.75, we have to balance up the equation for us to survive because we are in business and this is one business where installations will have to constantly go under routine maintenance to avoid inconveniencing our customers,” he said.
Mr Kapata said that the price of raw materials in the energy sector were not static and thus the need to revise electricity tariffs to meet the market price of raw materials.
Meanwhile, under residential tariffs Mr Kapata said that the utility company had not changed the tariff but instead, bands have increased from 100 units to 300 units in order to cushion low income customers in what is called ‘‘Lifeline tariffs’’.
Mr Kapata added that ZESCO required emergency energy in order to continuously provide the service and there was need for bilateral arrangements with competitive electricity markets.
“As a power company, we are not an island; we also trade because there are times of difficult that we will require emergency power for us to continuously provide the service,” he said.
He said that the core business of ZESCO was hydro power but because of the diversification to energy mix, electricity tariffs must be attractive.
