Zesco managing director Victor Mundende says electricity tariffs will reduce again once the utility has managed to clear off the loans it has acquired for purposes of increasing generation capacity.
And Mundende told a media briefing today that Zesco did not intend to exploit its customers, but to empower the utility with enough capacity to generate electricity that meets the demand.
“We don’t want to exploit people by selling power at exorbitant prices but we want to sell it at a correct price. The price of electricity has remained stagnant for a very long time while a lot of economic fundamentals have been changing. So whatever could be bought at k20 about 20 years ago can not be bought at the same price today. The benefit will be a lot because we will be able to develop a lot of projects. As you can see Batoka is estimated at 4 billion [Dollars] but for me I can say it could even reach 6 billion [Dollars] and $6 billion is not a small amount,” Mundende said.
“So we need money to grow our economy and make sure that we have security for our projects but eventually, once all these projects run for a period of time, the prices of electricity will go down after we have cleared the loans.”
He said the upward adjustment of electricity tariffs by 75 per cent this year was inevitable because power supply demand has increased tremendously over the years.
“Zesco has an ambitious plan for growth, but unfortunately we don’t have money to implement it. Even at individual level I know we have various plans but why are you not implementing them? Because you don’t have money. As Zesco, we have an ambitious programme where we would like to accelerate the economy because if we lag behind then there will be suppressed demand. People would like to do things but if there is no power there will be nothing. We will continue doing ambitious projects in order that we can grow as much as the economy is growing. If we stop growing, I think the economy will not grow,” Mundende said.
“If you look at the growth of electricity generation capacity in Zambia, we as Zesco have only been growing the supply [base], adding more customers but we have never been growing the generation. What we did to Kafue gorge sometime ago after commissioning it in 1978 to 2012 we have never added a mega watt and in 2012, we just added one mega watt but we know how the population was at that time. If we are to service our customers efficiently we need to increase supply to match the demand and so we need this money if we need to grow our supply.”
Meanwhile, Mundende said Zesco will no longer import power because it was too costly.
“I don’t have the exact figure of what we owe to the electricity suppliers here, however I know government paid something recently. However, we will not be able to renew those contracts because it was very expensive to import power and we are no longer importing. So once they are cleared, we are not renewing their contracts,” he said.
Mundende however said it was inevitable for Zesco to borrow.
“Borrowing is part of business and in business you need to have liabilities and the fact that you have debts means that you are very viable. Our idea is that we are just trying to convert the debts to cash, you understand? We are already in discussions with the Development Bank of Southern Africa who would like to restructure our debts, consolidate it and they will pay off our debts and then there are so many Banks actually who have been coming to us telling us that they would like to do that,” he said.
Mundende said Zesco wanted to run commercially as a business and stop relying on government funding.
“The very fact that so many people are attracted to us and are willing to lend us money means that we are very viable or else no one would be interested in us. We are not for the idea of running to government all the time to ask for money and subsidies, but I think we would like to run Zesco commercially and also give a dividend to government. Like I said, we would like to be a hub of electricity trading in the religion and for us to do that, we are going to do all these interconnections in four African countries namely; Zimbambwe, Zambia, Botswana and Namibia, something we are calling ZIZABONA,” said Mundende.
One Response
Ideally what Mundende is telling the us the Zambian people is that we are the ones servicing the loan that ZESCO acquired, by virtue of increasing the traiffs. Therefore, the make-up on the tariffs, is what is going towards servicing the debt they acquired. Now! this is clear that ZESCO are also borrowing the repayment amount from its consumers – us, to service their loan – without paying us interest for the lending. A business does not increase its products to merely service its borrowings and then later on reduce the pricing after servicing the facility. This is tantamount to fraud. Victor’s business acumen is questionable, to say the least.
Is he also saying that, once the loan is repaid, the amounts, that they would have borrowed from each electricity consumer, they will repay us? Because, if you hear him correctly, ZESCO did not have the funds to acquire this loan in the first and so they looked up to us the consumers to be the means of repaying the facility by of increased tariffs. So all, they would have done was to ask us as consumers to lend them the funds and repay us later.
And you can imagine, he has not never told us when the loan is coming to an end.
I think what should happen is ZESCO should be privatized and the total amount that they would have borrowed from us (though without our consent) should be converted into our shares with the firm. And you see the beauty about all this, it will still be wholly Zambian owned.