Energy Minister Mathew Nkhuwa says electricity tariffs could go up by as high as 75 per cent, similar to the previous increment effected in 2017.
And Nkhuwa says government is currently reviewing a possible fuel price adjustment to take into account pricing fundamentals, such as the depreciating kwacha and rising oil prices on the international market.
Meanwhile, Nkhuwa says there is need for greater sensitisation of the Beyond the Grid Fund for Africa (BGFA) project to ensure there are more Zambians who have access to electricity on both on-grid and off-grid platform solutions.
Speaking to journalists on the sidelines of the BFGA, a private sector stakeholder consultation workshop in Lusaka, Tuesday, Nkhuwa disclosed that the imminent power tariffs could be adjusted by as high as 75 per cent, a similar increment effected two years ago.
Asked when the Energy Regulation Board (ERB) is likely commence the process of receiving submissions from stakeholders on the proposed power tariff increase, he said the process would start soon after Cabinet approval.
“We will begin very soon. But we haven’t set-up a date, but very, very soon, we will begin because we have to take it to Cabinet first and discuss it. Once Cabinet okays it, we will begin,” Nkhuwa said at Neelkanth Sarovar Premier Hotel.
Asked whether consumers should expect a similar tariff adjustment of 75 per cent effected in 2017, he said: “Somewhere around there, but I can’t preempt, but somewhere around there. As soon as they sign that (power import) deal in South Africa, then we will work out. In fact, Zesco right now is working out on the tariffs, then we will see and then we will have to approve them.”
And Nkhuwa said the government was currently reviewing a possible fuel price adjustment to take into account pricing fundamentals such as rising oil prices on the international market.
He was reacting to the sharp oil price hikes on the international market in the wake of Saudi Arabia’s oil facility that was sabotaged by a drone strike last Saturday.
Brent crude oil prices spiked by over 10 per cent after the Saturday attack on Saudi Aramco’s oil processing facility at Abqaiq and the nearby Khurais oil field, a development which knocked out 5.7 million barrels of daily crude oil production or more than half of Saudi Arabia’s global daily exports and over five per cent of the world’s daily crude production.
“I know about what has happened in Saudi Arabia; it is most unfortunate, but this is what happens in the world; things are not straight all the time, and what has happened is that the [oil] price will definitely go up. But we have got old stocks so we are not going to increase the price of fuel on the old stocks,” Nkhuwa said.
“The [fuel] price is quite high so we will see what happens and we will able to inform the public at large and see where we are. But, obviously, the next stock that we will be buying will be more expensive so that one, the people just got to pay for it, it’s unfortunate what has happened. Already, we are looking at a fuel price adjustment before this [Saudi] crisis. So, I don’t really know where we will be, but it’s a bit a difficult for the people; when the fuel price goes up, the cost of doing business just shoots up!”
And asked further whether the Ministry of Energy would consider buying Brent Crude from an alternative source in view of the ongoing instability in the Middle East, he said government was reviewing the option of bio fuels.
“Well, what we are looking at is bio fuels like bio diesel, ethanol and so on. Very soon, we will be accepting ethanol in Ndola at Indeni (Petroleum Refinery) so that we can have 10 per cent of our own product, and that way, we will be able to save the kwacha because if we can reduce the fuel purchases by 10 per cent, it’s quite a huge amount over a period of a year. So, we are encouraging people to produce more ethanol and bio diesel,” Nkhuwa said.
Meanwhile, officially opening the two-day BGFA consultative workshop earlier, Nkhuwa said initiatives like the BGFA that catalyze private sector investment in the off-grid sector needed to be supported.
“One of the major barriers to off-grid market development is the affordability of off-grid solutions for most rural households. Therefore, incentivizing the off-grid sector to overcome this barrier is critical. To some extent, low affordability can be as a result of low awareness levels among rural communities, where the majority of the rural households view grid connection only, and not off-grid connection, as electrification. Therefore, there is need to grow awareness to ensure that Zambians appreciate the opportunities offered by off-grid solutions,” said Nkhuwa.
The BFGA for Zambia is a programme launched in 2016 designed to enhance access to electrification in the country, with an initial capitalization of US $23 million, funded by the Swedish government, implemented by the implementing agency, REEP.