Minister of Energy David Mabumba says the 75 per cent electricity tariff increase is a national emergency.
And Mabumba says government will not allow cartels in the procurement of fuel once surrendered to the private sector.
Speaking at a Patriotic Front interactive forum at Chrismar Hotel today, Mabumba insisted that the tariff increase was inevitable even though it would affect the cost of living.
“So there is no need to politicize the increase of electricity tariffs. I speak as a Zambian first and foremost and in addition as a minister. It is a national emergency because without power being sold at the right level, Zesco will not be able to invest. Your parents wherever you have left them in the rural areas will never have power. The tariff structure is not a PF agenda, it should be looked at as an agenda for the nation,” Mabumba said.
“And when I go to the mines, it is a headache to explain this and even some of you have asked me so many questions like don’t you think this will have an impact on the cost of living? And I have never hidden; I said yes, marginally, it will have an effect. But again, it is something that has to be done.”
He explained that Zesco had been spending much more than it generated.
“Government has been subsidizing over $500 million annually. If you look at the two sectors it is actually maybe closer to a billion in terms of subsidizing. For electricity is even worse because Zesco supplies you power at 3.3 cents per kilo watts as a domestic consumer they supply the mines at about 6kw cents per hour. Since 2015, Zesco has been importing power at about 12.9 cents per kw hour…and when they bring it, they sell to you at 3.3 cents per hour. So my dear colleagues if you subtract; just that average I gave you 12.9 cents per kw, the difference is what this government has been subsidizing. So surely, even if it were you, you go to Soweto, you buy your chickens to go and resell at K40 and you go and sell at K40, is that business going to be sustainable?” Mabumba asked.
“It’s just that Zesco has been a very strong parastatal otherwise we would have forgotten about it because the amount of subsidies that government has been topping up is so huge that Zesco are not able to generate internal funds for them to invest in the system. If you look at all this and also the operating expenditure for Zesco which stands at K9.7 billion while their revenue schemes stands at K6.4 billion. And out of that K9.7 billion, almost K7 billion is used for the importation of power.”
He said even investors would be attracted by the cost reflective tariffs but added that consumers were still being protected.
“PF is proving that it is a pro poor party because the lifeline tariff is going to cover you and I. You will only start paying a higher tariff once you consume beyond the 300 units which we have proposed. You will only be paying K45 if you use 300 units. We are protecting your income,” Mabumba said.
And Mabumba said government would not allow cartels in the procurement of fuel once surrendered to the private sector.
“Those are business men, they are looking for money. I don’t know what they might do, they might create a cartel so I need to protect the Zambian consumer. So it is because of this that we decided to ask the Minister of Finance to give us a leeway that we put in place a framework. And so far like I have said we have done a consultation…once the petroleum management bill has been approved by Cabinet, the bill will probably be approved and by June thereabout, we will now flout a tender. We are going to be very cautious, we are not just going to allow a free fall of the private sector to come in. it is going to be a controlled, gradual process so that as a country we can build capacity,” said Mabumba.
“Look at the mining industry, and I am sorry to say this but the leverage in terms of negotiation is gone. So even in terms of allowing the private sector to be part of the financing and importation of the petroleum products, I want to take it through a gradual process and I am sure my Cabinet colleagues are going to support that. And we also want to ensure that we start the construction of storage facilities. We have already done in Mongu, in Mpika and Solowezi what about the other provinces?”
The Minister also advised Zambians to invest in alternative sources of energy at household level.