Zesco Limited acting managing director Webster Musonda says consumers should not expect a reduction in the number of load shedding hours despite the imminent importation of power worth 300MW from Eskom, South Africa
And company director strategy and corporate services Patrick Mwila says that the proposed import tariff hike could go as high as 200 per cent depending on the consumer’s usage.
Meanwhile, Zesco director of commercial and customer service Chiti Mataka says that the power tariff hike, triggered by the emergency power imports, will not be used to “sneak in” a general tariff increment.
Speaking during a media briefing, Tuesday, Musonda announced that a review of the current load shedding hours will only be based on the consistency of the power being received from Eskom, the South African power utility.
He was reacting to a question relating to what impact the 300MW power imports will have on Zesco revising their load-shedding schedule.
“For now, until we commence, that’s why I am saying, it will be subject to updates. But for now, I think we updated and we’ve shared the schedules based to the eight hours. But even in the presentation, we indicated that once the importation starts coming in, there will be some review done to those schedules, and whatever reduction will be made on those schedules, we will pass on the benefit to the customers and we will communicate accordingly. We should also just try to understand, if you like, from the distribution point of view: the system does not recognize the suburb boundaries, so you can have two people in the same suburb being supplied by two different networks; so, (when) you switch off, others complain that they are the only ones being switched off, it’s because of the way the system is. You cannot say these lines are dedicated for Kanyama and these are for Chawama, there will be different sources because some of these townships developed at different times so you need to bear with us. But, of course, there will also be sometimes system constraint,” Musonda explained.
“Our preference was that, we have this available 24-seven, meaning it’s committed, it’s firm. Eskom should ensure that power lands across that Kariba complex into pour system, but they have their own challenges and could not commit to firm supply so we will have a mix of non-firm during peak. Peak window is usually between three to four hours and the rest of the 18 hours, we are going to have firm power, meaning 300 megawatts is going to be directed, it may or it may not be there during peak. When it’s available during peak, then the price goes up slightly at that time. So, that is the cost that we spread across to all the customers because we don’t want to segregate because the benefits will accrue to all the customers, both residential or industrial. I think our focus will be to make sure that there is fairness in the implementation of these schedules so that they are predictable, but if there is going to be any issue whether technical or otherwise, that will make it difficult for us to stick to these schedules as published, then we quickly have to get to the media to make sure that we inform the public on what is happening.”
In response to a question on the elusive Cost of Service study as a basis to establish the true cost of producing power in Zambia, Musonda admitted that Zesco was frustrated over the delay in the finalising of the Study, though he said the chosen consultant had been selected, but that the contract was yet to be signed with the Energy Regulation Board (ERB).
“The Cost of Service Study, we also share the same frustration in terms of this exercise! There was a Cost of Service Study that was carried out and concluded in 2006. The Cost of Service Study is proprietary to the Energy Regulation Board; it does not belong to Zesco. That is for the purposes of ensuring that in the manner and way it is developed, the objectivity and independence of that Cost of Service Study is assured. In fact, it’s impacting Zesco more than the mining companies or the customers. But we are told that the consultant may have been selected, but maybe the contract is yet to be signed, but looking at where we are, this exercise maybe can only finish towards the end of next year, but we are looking towards a final completion of this exercise,” explained Musonda.
And Mwila revealed that proposed import tariff hike could shoot up to as high as 200 per cent, depending on the consumers’ usage.
“Even when you say 75 per cent, it’s not the same in all categories, you know why, because some categories are more subsidised than others. So, if you are paying 15 ngwee, for instance, and if you are enjoying consumption in the lifeline category of 200 units, you are paying one cent at the moment, the cost of imported power will be no less than 15 cents so for you to participate and share, you will see a migration, which is far more, where someone that is paying 89 ngwee, which is closer to seven cents, the difference will be less. It goes without saying that when we start talking about percentages, we will lose it because it is neither here nor there. If you are coming from one cent, it will appear as if you are paying more, but you must remember that, that is a heavy subsidy that is enjoyed by everyone. So, I will just say that on average, you may see it could be a jump of about 200 per cent or less, or more, depending on your consumption,” said Mwila.
Meanwhile, Mataka explained that the current proposed import tariff increase would not be used to “sneak in” a general tariff hike.
“Zesco is not riding on the importation issue to sneak in a tariff adjustment that has a separate dynamic. That was proposed separately and has been put on hold. So, it is not to say that because of the importation, then there is a general tariff adjustment. All that we are saying is that, we need to have enough liquidity in order to fund the importation programme over the next six months. But for whatever it is that we do, we have to get regulatory approval, and the regulatory approval that we are awaiting is for the import programme, and for the pricing at the import prices that is separate from the general tariff adjustment. When we get to the stage of asking or restarting the engagement with various stakeholders on the general tariff adjustment, that requires approval in its own right. So, the regulator monitors and controls all the activities that Zesco does. When the programme comes to an end, there is no justification for us to pass on costs for something that does not exist. If the rainfall pattern is good enough, and the need for imports start reducing, then the benefit will definitely be passed on to the consumer. So, the 75 per cent discussion going round is just to show that there is going to be an increase,” explained Mataka.
The 300MW emergency power import deal signed with Eskom is scheduled to take effect from October, 2019, for a fixed six-month period, costing an estimated grand total of around US $123 million, or around US $20.5 million per month, according to Zesco.