Zesco needs competition to narrow Zambia’s power deficit – ZACCI

The Zambia Chamber of Commerce and Industry (ZACCI) says there is need for private sector investment in the energy sector because Zesco has no capacity to satisfy all of the country’s energy needs being a public utility with a lot of limitations.

In an interview with News Diggers! ZACCI president Michael Nyirenda advised government to create an environment that attracted investment in the energy sector in order to stop Zesco from monopolizing the energy industry and provide people with alternatives.

He observed that the power utility’s four-hour long loadshedding will lead to losses in terms of production capacity for both small and bigger businesses because market players varied in terms of financial capacity to switch to alternative energy sources during power outages.

“There will be losses in terms of production capacity for both small and bigger manufacturers due to this load-shedding because not everyone will have the capacity to have an alternative source of energy. Even for those that have that capacity, it will be an added cost. For the small-scale businesses, they don’t even have an alternative. So, for them it means loss of business and profit. Then in terms of that loss, Zesco themselves are not billing for the period that there is load-shedding. So, it’s not really that it’s only business clients that are losing out, but even Zesco themselves; they are not getting the money for the period that there is load shedding. And now that there are meters, they will not get money from me for the time that there is a load,” Nyirenda said.

“Then in some areas like North-Western Province, it is being reported that load-shedding is happening twice a day and in other places, it’s going beyond four hours as announced. So, it means capacity has reduced because there is more demand than they (Zesco) would have thought. So, that’s another challenge. The trickle-down effect, therefore, is that there is reduction in capacity in terms of production and it means that even the revenue into the Treasury will be reduced because there is less production.”

Nyirenda said there was need for more investment in the energy sector to address the deficit.

“The way forward is that we need to look at alternatives more seriously than we have done in the past. Zambia has the capacity to diversify its energy sources, but there is no will to do that. Diversifying energy actually increases the capacity to meet the demands other than depending on one source. Right now, we are about 84 per cent (dependent) on hydro. But we are not in charge of our climate, we don’t know what God has in store for us next year or even this year, we don’t know whether we will have good rainfall. But we have the capacity to diversify our energy sources. But even if we depend on hydro power, we’ve not tapped in the northern part and other areas; we’ve concentrated on the Southern part. So, much as we are talking about diversification, we have not actually exhausted the other areas in the northern part of the country,” he observed.

“But then the other point to take is that, if we rely on Zesco alone for our energy, we might have a challenge. But if we encourage private sector investment, we will probably have the private sector coming to invest. But we need to create an environment that attracts the private sector to invest. Zesco is a public utility and it’s got its own limitations. But if we open up to the private sector, there will be many other people interested in this investment because they will run it as a business. Probably they will run it better than Zesco and we might not have to pay higher costs than necessary because right now, there is no competition anyway. By our laws, even if I were to generate my own electricity, I can only sell it to Zesco. So, that is a limiting factor from the private sector’s point of view in terms of investment.”

He also urged government to embrace energy diversification as a money-making venture where electricity generated in Zambia could be could sold to neighbouring countries.

“The facility is already there; other people are already making use of that so that if I am generating power in Luapula, I can not necessarily sell to Zesco; if Zesco doesn’t need it, I can sell to a company in South Africa or Congo (DR). So, it becomes a business also because right now, you have to negotiate with Zesco. But Zesco is also a competitor, so they may not be interested. You may be producing competitively than they are currently, so you are competing with them. And the government is saying to you ‘negotiate with them,’ but it doesn’t work like that because they are also a participant. You can’t be a participant and again negotiate with them. Then, we need to actually review the Electricity Act itself because as it is now, it does not enhance competition,” said Nyirenda.

According to Zesco’s power balance outlook for the rest of this year, Zambia is forecast to be in a power deficit position in the last three quarters from being having a surplus in the first quarter.

This has resulted from a situation where the country’s average available power generation capacity is 1,629 MW against an average load of 1,913MW, leaving an average power deficit of 251MW.

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