Imagine that right now you had a choice between two options:

1) Continue with cheap electricity but get 8 to 12 hours of load shedding.

2) Pay twice per KWh what you are currently paying, but you get power 24 hours per day, 365 days a year.

Which of the two would you choose? I can bet my last Kwacha that 99.99% of Zambians would choose option 2.

They would grumble at the beginning, but then eventually adjust and get used to paying more. Almost everyone (except the few with kasaka ka ndalama) would use less power, since they would feel the pinch and the demand for power would eventually cool off and reach an equilibrium with the supply. Then we would never ever have load shedding because there would be plenty of power at the higher price point with reduced demand.

Zambian electricity is too cheap. But by law, ZESCO cannot unilaterally increase electricity tariffs, a relic of the Socialist UNIP government. They need permission from government through the Energy Regulation Board (ERB). ERB holds public meetings, some people protest that electricity is too expensive, the ERB Board sits after taking their orders from upstairs and they almost always push back against higher electricity tariffs proposed by ZESCO whose hands are tied. But this is exactly what we need. Expensive electricity.

What the government should do right now is amend the laws and regulations and allow ZESCO and other players to charge whatever they want, whenever they want. No need for ERB approval or public hearings. Forget “Cost Reflective tariffs”. What we need are “Market Reflective tariffs”. As we wait for the law to change, ERB can just give blanket approvals for tariffs to go up until things settle between Demand and Supply. If only our government leaders had the courage to bite the bullet instead of what they always do of taking a gun, taking careful aim and shooting themselves in the foot!

Many will push back against this “crazy” proposal because ZESCO will begin “exploiting” us since it is a monopoly. But that is besides the point. We need an immediate solution and cannot keep repeating the same actions but expecting different results. The Physicist Albert Einstein called that insanity. Moreover, we can solve the monopoly problem by splitting up ZESCO into Generation, Transmission and Retail. Privatise Generation and Retail and keep Transmission with shares floated publicly.

ZESCO Transmission would eventually pay off the current $3 billion ZESCO debt with increased revenues and would invest in maintaining the grid. More players with big pockets would build many new power plants, attracted by the high prices of electricity that are free to move up or down. They all want to make a killing, so the supply of power would naturally increase with more players until the tariffs eventually come down in future. Let the free market do its magic mwebantu!

Now, of course expensive electricity means production costs of goods and services go up which will trigger some short term inflation. But most nations in this part of Africa actually have more expensive electricity than us. How are they managing? Countries in the region are still exporting and surviving. Between cheap power but zero supply for 8 hours per day versus expensive power but always on, the latter is obviously a lesser evil.

Businesses will lose some customers due to increasing prices with more expensive power, but they will still retain some business. When you switch them off for 8 hours in the morning, they lose half the business day and there is a mad scramble to catch up in the remaining few hours of daylight left. This leads to even higher consumption of the cheap power which defeats the whole point of load shedding, and may even overload the grid since everyone wants to turn on their grinders, cookers, geysers, welding machines, etc, at the same time (rather than spread out during the day).

Whilst expensive electricity solves load shedding, it introduces in the interim a major problem of higher demand for charcoal which means more trees cut down and more Climate Change and less rain and lower Kariba Dam water levels. However, as I already stated, high electricity prices that are not subject to government price controls causes increased investment in new power plants which leads to cheaper power and thus more people connected to the grid and hence less demand for charcoal.

Another good (but very expensive) solution is a technological one. Smart electricity meters which communicate with the ZESCO system and implement localised load shedding. Customers who want power 24 hours a day pay a higher tariff. Their next door neighbour who cannot afford voluntarily remains on a lower tariff but gets “load shedded”, if such a term exists. Everyone will be happy and we can all live happily thereafter with no more “load shredding”.

FURTHER READING
The Real Cause of Load Shedding – Zambia’s Low Tariffs
https://eaz.org.zm/articles/2022/09/26/the-role-of-electricity-tariffs-in-zescos-crisis/