ZESCO Limited says the company used to go as far as borrowing from the capital market in order to connect customers under subsided rates.
And ZESCO Corporate Affairs Manager Dr John Kunda says under the cost reflective connection fees, customers will be charged according to their requirements as guided by a quotation generated after an assessment.
In an interview, Wednesday, Dr Kunda said the debt which ZESCO could have incurred going forward, would have also been attributed to charging non-cost-reflective connection fees and tariffs.
“So what happens normally is that because your connection charges are disproportionate, meaning you are connecting pa nkongole (on credit) at a subsidized rate, there is a gap. So for something that is costing K10,000, if you are charging K3,000 [and] you have to find the K7,000 somewhere. So you would find that the aggregate of what you have collected can only connect certain customers, so you are lagging behind. There are several factors that cause a backlog. Unavailability of materials, financial constraints are some of the issues that you may look at. But what we want to move towards is where a customer when they pay the true cost, because sometimes we have had to resort to borrowing on behalf of customers from the capital market. So you want to move away from that so that if you are charging cost reflective fees for something, you are going to use whatever it is and other sources within your means to connect the customer immediately. That is the idea,” he said.
“So there is a certain extent that the debt that ZESCO would have incurred would have also resulted from some of these gaps or deficit results from non-cost reflective [fees], either connection fees or the tariff itself. It’s like mule shitisha ama taba pa (it’s like you are selling maize at a) loss. You produce at K100 but you are selling at K10, where are you getting the K90 from? Because there is an assumption that ZESCO gets some money from somewhere to fill the gap but awe (no).”
Dr Kunda said under the cost reflective connection fees, customers would be charged according to their requirements as guided by a quotation generated after an assessment.
So if you are a technician, you will be saying what they have removed is the deflation of the true cost. Bai chitafye suspend, balanda ati awe twilachita (they have just suspended it and said let us not) deflect, I think lekeni abantu bale lipilafe (let the people just be paying) in accordance with the material they require, chapwa (that’s it). So is that an increase? So what we are saying is yes the cost to the customer is not the same as the way it used to be when it was being subsidized. I want to explain it as clearly as I can because usually there is room to misunderstand. From a technical side, what ZESCO is saying is that from those specific connections that we are referring to, ZESCO Limited is saying we will continue charging cost-reflective connection fees. And what that means is that normally if we come to your home, we conduct a technical assessment, maybe the cables, the meter, the pole and other things. So the technical specification is what informs the quotation,” said Dr Kunda.
“That is why the quotation is always generated when the visitation is done. It’s not done in the office. They come, they conduct the assessment and with that assessment then they guide. They will say for this particular application, the total amount that you will need to pay, for example, the technical spec reviews that you are supposed to pay K10,000. Previously what used to happen, there is a pre-defined system which was a form of subsidy because it used a deflation matrix. So once you put in the K10,000 then we would reduce the cost to maybe K3,000. These are like penetration costs at the time it was arrived at. That was a form of a subsidy and so what we are trying to say now is when we come to your home and we access what you need, the cost that we arrive at is what we are going to give you. It may be different depending on the extent of what you require.”