The government is making some rather laughable statements that the current load shedding which officially began on 15th December 2022 is beyond their control and an act of God. Well, God does not control the human made systems that allow electricity to flow into our homes and businesses.
Perhaps what they mean is that the poor erratic rainfall and low water levels in Kariba Dam is an act of God. But truth be told, it is human activity that has largely produced these effects because it is people who are cutting down trees, burning forests and disturbing the flow of rivers into hydro electricity dams, causing them to dry up faster due to quicker evaporation, soil erosion and poor rainfall.
However, the inconvenient truth is that it is completely within the power of government to eliminate load shedding forever (more on this later). Team Red was elected to solve these kinds of problems. They are just making poor excuses after proudly announcing to the nation that they had ended load shedding within one year of taking office. They have not addressed the root causes of load shedding. A bit of history is instructive here.
In a write-up entitled “The Role of Electricity Tariffs in Zambia’s Power Crisis“, British Economist Alan Whitworth, who formerly worked at Zambia Institute for Policy Analysis and Research (ZIPAR), notes that Zambian electricity tariffs have historically been very low for the better part of four decades. After the disastrous nationalization of the mines in 1972 under UNIP, Copper production fell from a peak of around 750,000 tons in 1969 to 250,000 tons in 2000 when the mines were privatized. The mines in the 1970s consumed 66% of all the energy in Zambia. Due to the demand for power from the mines dropping in the 1970s, ZESCO had excess. So they used very low tariffs to attract more usage by Zambian households and industry.
This continued all the way to the MMD government when the economy began to grow fast and the electricity capacity was finally eclipsed in 2007. For many years before this, ZESCO had been writing to government to warn them that new generation capacity was needed. But the MMD government completely failed to rise to the challenge and by the time they had organized money to build new power generation and allowed electricity tariffs to begin increasing, it was too late. The PF government continued the same mess and here we are today. The low tariffs have meant there has been little money made for investment in proper maintenance and grid expansion at a fast rate. According to Zambian Economist Caesar Cheelo, almost a quarter of Zambia’s electricity is lost during transmission due to lack of investment.
The single most important thing the government should do to eliminate load shedding is stop price controls on electricity tariffs. Abolish the process whereby ZESCO has to apply to the Energy Regulation Board (ERB) every time they need to increase tariffs or anything else for that matter. Imagine if we had a Tomato Regulation Board! To get a more holistic solution, the UPND government should be bold and do four things instead of taking the easy way out by kicking the can down the road.
1. Scrap price controls and allow ZESCO or any other power producer to charge whatever they want, whenever they want.
2. Scrap the electricity subsidy worth around $500 million. Also scrap the Lifeline Tariff for the first 300kWh of power.
3. Split ZESCO into generation, distribution and retail and privatize the first and third. Leave the grid as a public company with shares on the stock market.
4. Give tax incentives to enable investments in power plants for other energy types like coal, gas or nuclear.
Critics of the first proposal to stop electricity price controls will argue that it will raise the cost of living, make our exports more expensive and generally cause some price inflation. However, the status quo is not tenable and is a bigger evil than what is being proposed. Aside from all the disruptions to life, business and the economy caused by load shedding, it makes the problem itself worse because lack of electricity leads to people buying more fossil fuels like charcoal which means cutting down more trees, which causes erratic rains and Lake Kariba to dry faster, which then leads to even more load shedding!
Scrapping the subsidy and lifeline tariff may sound bad until you realise that only about a third of Zambian households have electricity. And these are not the poorest Zambians. Moreover, Zambian electricity is too cheap, always in the bottom ten for tariffs in Africa (sometimes lowest in Southern Africa). As of March 2022, Zambian electricity is the 19th cheapest in the world, 7th cheapest in Africa and 3rd cheapest in Southern Africa.
Others will argue that we are building more electricity generation from hydro and renewables. But dams are expensive and take long to build (5 years on average). The population and the economy won’t wait while we take 5 years to build the next Kariba Dam. Demand will always be ahead of supply for the foreseeable future. Renewables like solar are impractical because they require huge expensive batteries. You need to clear forests to create solar farms which is self-contradictory if you are trying to save the planet. Solar panels are not recyclable and need to be buried in land fills which harms the environment. Batteries need to be replaced every so often and contain toxic materials.
Then there is the related question of “cost reflective tariffs”. I say we need “demand reflective tariffs”. Cost reflective tariffs are a red herring and do not address the core issue. Whatever the true cost of generation without subsidies is, it is irrelevant if people continue consuming too much power at that low “cost reflective” price and you still have load shedding.
An increase in the electricity tariff will have many good benefits beyond ending load shedding. There shall be predictability which is good for business investments. All those fancy MOUs government is signing for FDI will come to nothing if the energy problem is not solved. Dangote Cement wisely built their own coal power plant, but most companies do not have that option.
There shall be more investment in electricity generation by private players since the price shall be high enough to attract them. This is likely to lead to lower prices in future as supply exceeds demand. Private investors can only pour in significant money if there are no price controls. Another benefit is that half a billion Dollars of an electricity subsidy shall be saved to do something more useful.
All Zambian governments from 1964 have failed to make the hard choices to solve the load shedding problem because of fear of political blow-back. UPND is no different, despite their promises to fix things and run the economy better. Decision makers are unfortunately too scared and indecisive to make the correct but difficult decisions. Politicians are more concerned about losing political power than making the country better when there is some pain for citizens involved.
But if they can bite the bullet, implement the difficult decisions and explain themselves properly, I think most Zambians will understand and support them, especially those who use electricity as they are generally better informed. Zambians would rather have electricity available whenever they need it even if it is more expensive. Team Red has the chance to fix this problem once and for all and this is not time to be cowards like the previous 3 governments.
Finally, in case someone argues that ZESCO will run amok with price increases due to being a monopoly, the splitting and privatization of ZESCO will solve this because it will only be a monopoly at the distribution layer. And even in its current form, ZESCO cannot endlessly increase tariffs because the market will eventually buy less and less power until there is excess left over with all demand satisfied. At that point, everyone will have adapted to the more expensive electricity and there will be no more acts of God to blame for load shedding.
REFERENCES
News Diggers – We didn’t plan for load shedding, it’s an act of God – UPND
https://diggers.news/local/2022/12/19/we-didnt-plan-for-load-shedding-its-an-act-of-god-upnd/
Yale University – Rivers in the Sky: How Deforestation Is Affecting Global Water Cycles
https://e360.yale.edu/features/how-deforestation-affecting-global-water-cycles-climate-change
IGC – Increasing tariffs to prevent another electricity crisis in Zambia
https://www.theigc.org/blog/increasing-tariffs-to-prevent-another-electricity-crisis-in-zambia/
Global Petrol Prices – Electricity cost comparisons
https://www.globalpetrolprices.com/Zambia/electricity_prices/
Caesar Cheelo on LinkedIn – Electricity shortage in Zambia was not inevitable
https://www.linkedin.com/pulse/electricity-shortage-zambia-inevitable-caesar-cheelo
Lusaka Times – Zambia is spending $1.3 billion on fuel and electricity subsidies every year
https://www.lusakatimes.com/2021/12/06/zambia-is-spending-annually-1-3-billion-on-fuel-and-electricity-subsidies/
Science Direct – The electricity crisis in Zambia: Blackouts and social stratification in new mining towns
https://www.sciencedirect.com/science/article/abs/pii/S2214629617301858
JSTOR – Fossil Fuel and Electricity Subsidies in Zambia
https://www.jstor.org/stable/pdf/resrep21996.5.pdf
Research Gate – Copper mining in Zambia – history and future
https://www.researchgate.net/publication/305927946_Copper_mining_in_Zambia_-_history_and_future
Alan Whitworth – The Role of Electricity Tariffs in Zambia’s Power Crisis
Alan Whitworth - The Role of Electricity Tariffs in Zambia's Power Crisis
