Financial analyst proposes power tariff hike

A financial analyst has proposed an increase in electricity tariffs to cushion the current deficit that has seen power cuts of up to eight hours per day.

Some parts of the country are experiencing load shedding of up 12 hours daily, throwing several businesses in a quandary.

Zesco had, however, earlier issued a statement that gave an indication that increased load shedding would be for six hours due to depleting water levels in the Kariba Dam.

According to Blessings Kafwanka, the country is “better off with higher tariffs that come with consistent and reliable supply of electricity” and ensure production capacities are maximized.

In March, 2019, Zesco proposed an average 113 per cent tariff hike, but President Edgar Lungu halted the move after an outcry from members of the public.

In a Facebook posting, Kafwanka stated that Zesco should be allowed to hike electricity tariffs so that they can import power to cushion the current shortage.

“Considering the current hardships we are experiencing, and the operational inefficiencies at Zesco, it’s understandable that many wouldn’t support the idea of increasing electricity tariffs. But the fact is: we are better off with a higher tariff that comes with a consistent and reliable supply of electricity that ensures that our production capacities are maximized than paying a lower tariff with an unpredictable 8 to 12 hours of load shedding. Cheap is expensive,” Kafwanka stated.

He has, however, noted that the current situation is likely to cause irreparable damage to the economy as the private sector has been hit hard by the deficit.

“Things have changed now. We are faced with circumstances that are likely to cause irreparable damage to the very backbone of our economy. Private sector businesses are folding up, banks are taking less deposits, ZRA is collecting less taxes. Unemployment is increasing, inflation is rising, mealie meal prices are skyrocketing, and considerable damage is being done to our economy. Surely, we cannot afford to sit and do nothing. Action must be taken,” Kafwanka stated.

“In May this year, President Edgar Lungu directed the Ministry of Energy to defer the tariffs review application made by Zesco to the Energy Regulations board. The suspension was good considering the circumstances that were prevailing at the time. We may detest the idea of paying more. But a tariff hike that guarantees a consistent and reliable supply of electricity is better for our economy than a low tariff that comes with 12 hours of load shedding.”

He emphasized that the IDC should, however, ensure Zesco improves on its efficiency before the tariff hike.

“This involves a comprehensive review and restructuring of conditions of service, particularly for senior management such as travel on company business, communication, provision of personal to holder vehicles, access to company products and services and any other such conditions that can be abolished, suspended or re-packaged to achieve significant cost reductions. If these measures are not taken before the tariff hike, we will not achieve anything but cause more suffering and poverty,” advised Kafwanka.

Natasha Sakala

About Natasha Sakala

Natasha Sakala draws inspiration from people who stand up for what is right. She is very versatile and likes to bring out issues as they are.

Email: natasha [at] diggers [dot] news

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clickit18
clickit18

Is the deficit as a result of low tariffs or low water levels? The best you can do is to spend those high proposed tarrifs to buy your own generator if that is feasible. You need to weigh the options.

Mark82
Mark82

I have to agree….. as a business owner, this load-shedding has been a disaster. Though having expensive electricity will negatively impact business, not having electricity will kill the economy. For those that think businesses can just buy gensets, keep in mind that most SMEs in Zambia simply can’t afford to buy or even maintain a Genset! Think of the barbershop or Hair salon around the corner……. their monthly sales alone may not even come to the cost of a Genset.

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