ENERGY Minister Peter Kapala says government will renegotiate the bulk supply agreement with Copperbelt Energy Corporation after the resolution of court cases by the end of the year.
And the Minister says the price of electricity will be informed by the results of the cost of service study whose completion will be expedited.
Responding to points of clarification after delivering a ministerial statement in Parliament, Friday, Kapala said he was hopeful that the court case against government would be resolved by the end of this year so that the BSA would be renegotiated.
He was responding to Pambashe PF member of parliament Ronald Chitotela who wanted to find out if the BSA with CEC would be brought back or re-looked in order to help Zesco break even.
“Madam Speaker, this government is out to attract investment, private investment so that we reduce on the expenses of the treasury. Madam Speaker, the current situation where the bulk purchase agreement expired with CEC, it is under consideration, we will be discussing with CEC but we can’t go further because there is a court case against government which I think we should be able to resolve before the end of the year and the bulk purchase agreement will be renegotiated so that the people of Zambia benefit. I submit,” Kapala said.
And responding to a question from Chawama PF member of parliament Tasila Lungu on whether the coming of the International Monetary Fund would result in an increase of electricity tariffs, Kapala said the cost of service study would inform the price of electricity, but noted that it was possible to get reduced prices with increased players on the market.
“Madam Speaker, I cannot confirm that because we are still waiting for the report, once the report comes in, the nation will be informed and that is when we can determine whether tariffs will go up or down. There is a possibility that tariffs will go down because there will be so many private people competing over transmission and generation,” he said.
“Madam Speaker, I think there is a misconception that when you hear of cost reflective tariffs it means price increase, no. We are waiting for the report to come and I am sure I will be able to share with this August House once the report is ready.”
When asked by Kalabo Central UPND member of parliament Chinga Miyutu on Zesco’s failure to connect new applicants, the Minister attributed the failure to the financial challenges the institution was facing but said it would be looked at soon.
He stated that there would be no political interference in the appointment of managers or directors at Zesco.
In his ministerial statement, Kapala highlighted gaps in policy, legal and regulatory frameworks as some of the challenges that the electricity sector was faced with.
“In order to address the policy challenges, the new dawn government will play a supportive role through the provision of an enabling policy environment to attract private investment into the sector. In this regard, an electricity sector reform is being undertaken to open up the electricity market; and facilitate increased private sector participation thereby encouraging competition and more importantly, moving away from the single-buyer model in which Zesco Limited was the only off-taker in the market. This will also include scaling-up investments in off-grid solutions, by de-risking investments in communal infrastructure,” he said.
Kapala said government would expedite the completion of the cost of service study in order to address the issue of the non-cost reflective tariffs.
“To address, the issue of non-cost reflective tariffs, this Government will expedite the completion of the cost of service study. This study is expected to be completed soon, once finalized; the findings of the report will be tabled before this August House. This is a major step to ensure implementation of this to Government’s vision of adopting and migrating to steady cost reflective tariffs. A tariff that ensures a return on investment, indeed a tariff that attracts private sector investments,” said Kapala.
“Further, a key ingredient in the Implementation of electricity sector reforms will be to improve ZESCO’ s efficiency; and financial sustainability, in order to foster more investments and reinforce ZESCO’s major role in the energy sector of contributing to economic growth.”