Bank of Zambia (BoZ) Governor, Caleb Fundanga has supported the proposal by the Zambia Electricity Supply Corporation (ZESCO) to increase electricity tariffs to up to 66 per cent by next month.
Dr. Fundanga said for the energy and electricity sector to attract significant investment, there was need to raise tariffs.
He said increasing tariffs would allow the expansion of electricity generation in the country, as it would attract private investment.
He explained that the proposal to increase tariffs by 66 per cent was one step towards exploiting the vast potential that Zambia has in electricity generation and make the sector profitable.
Dr. Fundanga further said, once Zambia increases electricity generation, she would export to South Africa, Namibia, Botswana and East Africa which have serious electricity deficits.
“If we do not increase the electricity tariffs, then forget about private investment in this sector,” he said.
ENDS/KSH/PK/ZANIS
what about consumption Mr Caleb Fundanga? Will you also generate more customers?
Nice analogy mudala!
Am disappointed can you call that dull thinking as nice analogy? what kind of economics is fundanga applying thats exploitation we are paying more than the countries we export to, salaries have not gone up..beside wen u increase pipo will find altenatives like generators and solar then where is the income anticipated? poor economics from the so called educated..
FUNDANGA!!!YOU ARE AN EDITED! DO YOU REALLY THINK ABOUT THE POOR PIPO OF OUR MOTHER LAND ZAMBIA.
Thank you for editing that nonsense. Forums like this one should not entertain slander and insults. Shame on you POPO!
I think you are right big man if you look at zesco and use econmic terms it is a comany operating on very low productIion possibilty frontier.Surely if you increase teriffs and income for zambians is low how does mr fundanga expect high demand ,come on lets be realistic the demand will shift to the left which is a negative for any comapny growht.Suggestion why cant the goverment introduce price floors for low income households pa zed i know this might coz a shortage for zesco but i belive locals have made zesco what it is today.
J seen my post on thye other side? lol!
Ba Governor… we know you can afford but that does not mean to say every Zambian has the source of income you luxuriously receive. And by the way are you speaking for yourself or for BOZ? you should actually specify… if anything you should be telling us about efforts and plans being made to put people in employment so that they can pay that 66% hike. Kind of reminiscent to the analogy of queing up for a bus and once inside, you wish the bus could just go because you are on it, and not thinking of others still queing. People are suffering as it is, we expect you to shut it on such aspects. Keep it to yourself Governor.
First of all how did they arrive at 66%…it’s kind of strange…
What did this man study again? I have never heard such a preposterous argument! Its beyond belief that a man with a PhD in a finance field can mention such utter nonsense!!
Was he sober when he made that statement I wonder? The problems here are in manner that enterprise has been ran. Zesco didn’t just appear today. What have they been doing the past 4 decades? Dont punish the consumer for mismanagement and lack of foresight and planning. Zesco just woke up and realised that we have neighbouring countries?
Mr Governor, corporations have several means of raising capital finance and am sorry this is not the most irrational. Sell corporate bonds, issue shares or seek partners if your export visions are plausible..
Just goes to show how capitalistic thinking can turn a blind eye to the human face of our societies, and its our job as responsible citizens to fight this ill!!!! It is no use thinking of private investment when people will remain suffering. Our goal is to make sure that all citizens have access to life-thats a basic human right!!
DORA Siliya yesterday told the judge Dennis Chirwa Tribunal that she did not understand what the word “nullity” meant as highlighted in the Attorney General’s legal opinion over the RP Capital memorandum of understanding (MoU).
what does he know, he gets free electricity. let him get fired n go to his farm in statelodge n see if he will afford the bills. hypocrite!
Dr Governor, You get more than K100m per month and 66% to you is nothing compared to a zambia teacher who gets K1m per month and rents a house for K0.5m in Chunga lusaka where fixed bill for electricity is K190thousand per month. Let us not compesate for ZESCO ineficiency (may be incompentence) they just need to trim down on the costs. Increase in electricity means increase in all house hold goods. Maybe you want to increase inflation rate in a country where companies are closing every day
That is a staggering increment for the average Zambian. The article seems to imply that Zesco will somehow generate more funds for national expansion by doing this but does not explain how these new customers who presumably are in non urban areas are going to afford to run towards Zesco with welcoming arms clutching wads of Kwacha they have hitherto been unable to spend!
It is a good move if you look at it from the point of view of maintaining the infrastructure. We are used to having free things and what we forget is that wherever those free things are coming from we are creating a hole. What I know for sure is that people have connected power after being diconnected. Others have connected it ways that cause wastage. But the only problem is that even after people show willingness to pay, the money will just end up being misused by politicians and top management at Zesco and not ploughing back into improving efficiency. One entity that really does nothing is ERB because it should have been looking at how ZESCO should improve effiency
Kamunyama. Its not about maintaining the infrastructure. you can never maintain the infra. by overcharging. Creation of more jobs will earn grz enough revenue to even maintain zesco. Again if zesco cant use modern technology to detect illegal consumers, then zesco still has a long battle.
Yes but jobs aren’t created from nothing Peter. If it was that easy we would all be home right now working in our country. The tariff has to be increased to allow for investment in this area, which means creation of jobs of course. I really think this could be something that Zambia excels at (the production of energy) in SADC. The same way that the coal mines led to the development of Britain is how I think Clean electrical production could start up the much needed renaissance we need. I could just be dreaming of course!
Iwe kamunyama, what are you talking about? We are used to free things? how many free things have you seen in zambia and can you get in zambia. Caleb is one individual i have come to respect, but his take on this is utter nonsense. He should be able to give proper and sound advice and not take the easy road. Govt should start doing all their roles. look at countries like botswana our govt should invest and hire credibal people to manage their investments even expartriates if need be. why punnish the poor ordinary citizen? Otherwise let them hike wages by 70%. Rubbish from our leaders and caleb.
So this means when they hike the tarriffs we are going to see investment flowing in the sector and jobs created. I pray this inceased revenue wont end up in wrong places at the ordinary persons expense.
come on kamunyama its not free or cheap electricty that has made ZESCO fail to attract investors. take a look at the salaries and wages that ZESCO pays its workers – more than 50% of total costs which is abnormal. These are the same guys who are overpaying themselves bonuses like the one Angela Chifire declared some two years ago. This increment is absurd to say the list especially that it is getting support from Fundanga. People like fundanga and Sisala running important institutions like ZESCO and BOZ are some of the reasons we cant develop our country! Lets be realistic ewe kambwanga Fundanga.
Imwe tata, electricity tariffs in Zed are way too high in comparison to other countries. Zesco has the capacity to improve and renovate their infrastracture if only it was run like a coperate company. There is no logic on earth on ARRIVING AT 66%. Wake up man! edited
Post is reporting that RB had reshuffles….is that true?
Yes it is true, wonder why LT missed that one. Maybe because it was a small reshuffle but one wonders why as most of them were moved, is it about presidential affairs? Whats with Mukuma
YOU CHAPS. JUST CREATE JOBS AND THERE WILL BE ENOUGH GOVT REVENUE INSTEAD MAXIMISING IT THROUGH EXPLOITATIVE MEANS. YOU YOURSELF CAN SUPPORT THAT OUTRAGEOUS INCREASE BECAUSE YOU CAN EASILY AFFORD. BUT WHAT ABOUT THE MORE THAN 99% OF ZESCO SUBSCRIBERS WHO EVEN STRUGGLE TO AFFORD A MEAL PAY DAY?
On “Dr. Fundanga further said, once Zambia increases electricity generation, she would export to South Africa, Namibia, Botswana and East Africa which have serious electricity deficits”, I totally think that Zambians must not sufer just to satisfy our Neighbours and the people in East Africa. Statistics, if I am not out of touch, indicate that Zambia has one of the highest electricity tariffs in Southern Africa and so why such a high increase of 66% and next month for that matter?
Mr Fundanga (PhD), please check from the Zambian Central Statistical office as to how much a family of 6 gets as monthly salary and their failure to make the datum line in hindsight after your comment.
Iwe Mudala ..how come you always copy and paste put of the article before you comment…You are strange…just an observation anyway!!
Thanks but mind your business baba.
I partly agree with you,The avarege zambian may not be aable to afford that much.Ofcourse tarriff increase may attract more investers but it’s good to look at the after effect on the zambian economy as a whole.The economy of any country is largely determined by the living stardards of the citizens.What real real benefit will the tariff increase have it will promote inflation and further deteriolate the alread low living conditions.We need to ask ourselves who really is benefiting from such a move,Govt. or the people?
Of course Fundanga will support it- it’a parastatal company and he’s obliged to support them without any obligation to give proper justification by a non-biased assessment. I want to see justification for ZESCO to increase their tarriffs by an independent assessment. Otherwise Fundanga is just parrotting arbitrary decisions. It’s not like ZESCO delivers their service properly. Why can’t ZESCO first get its house in order, and give banks a sound reason to lend them money in order for them to improve their service delivery. That will give them justification to increase their tarrifs. ZESCO in it’s current fiasco of corporate management can only source money by hiking tarriffs-very sad.
Very sad comment indeed. Even ““If we do not increase the electricity tariffs, then forget about private investment in this sector,” he said”, is way off the mark. Private investment can start to follow immediately without the increased tariffs if the GRZ puts in place well-meaning measures for others and i to invest in this electricity sector especially as Zambia Citizens.
It is only us Zambians who will bring serious development to our own country and not people who aim to syphone every bit they can from our Nation using underhand methods perpetrated by the warm and easy way environment our 17 year old MMD GRZ has provided them foreign investors with.
I hope you will rescind…
But, Maestro this is the problem of zambia’s politicians. They cannot support you and me to invest in zambia, but non-zambians. I don’t believe a chinaman is interested in developping zambia or any other african country. They there to rip while the dog are widely awake.
The best thing for Zambia is to quickly go into manufacturing industries where value will be added to our minerals and timber products, and others to avoid externalization of raw material to developped and seriously developping countries, (zambia is not a developping country-it retards). This can be achieved by formulation of real investment policies which favour mainly the indigenous zambians. Currently, investment policies by far do not favour zambians. They are in favour of foreign investor-they really lough at us.
Very cool observation.
At the current tarriffs no sane human being can invest in power generation. how can you invest $100m where the return or profit will only come after 200years.When you want to produce a product for sale you firstly look at the price and then project using the same price as to when you will recover your money. If price is low then recovery period is muyayaya.Point of correction Zambia has the lowest electricity tarriffs in the region second only to Zimbabwe.Mr Fundangas argument is that once we start exporting the export revenue will then subsidise the local consumption which will be a small fraction of the total produce.
Engines… are you assuming what the governor’s next move is? There are so many areas that much required funds can come from. One of which is making sure all government institutions are as efficient running as possible. Secondly, as is being done if at all, embezzlers should be severely punished to make you and me think twice on embezling. Right now what the Zambian people are doing is paying for the government’s inefficiencies.
Engines thanks and I hope you are right.
Well, perhaps they have found a money spinner and a novel path in Economics – hike the price and demand will follow. On that basis, Zambia will do well to export its expensive imported oil to South Africa too. And why stop there, copper demand has fallen sharply, perhaps increasing prices will sort out that little problem too.
C’est Encroyable!
Does this man feel mercy for the Zambian people? At this critical hour when people are loosing jobs, companies strugling and some closing because of the financial crisis. The production costs are high,the kwacha has gone astray.Honestly is this the right time for Sisala and the whole being of Fundanga to wake up and start talking about hiking electricity?What kind of people are these? Shame!
What?
Jaro; now that’s some constructive sarcasm! I agree with you. Sometimes I feel we should challenge the degrees of some of these institution chiefs. The statements they put out are disingenous at best and criminal at worst! The problem with ZESCO will never be sorted out by just throwing more money into the company-it’s even more criminal to punish ordinary Zambians by not giving them an alternative but to subscribe to that 66% increase. ZESCO needs to restructure itself. A suppossedly learned man as Mr. Fundanga KNOWS banks will not risk their money because of their corporate management mess. Thus ZESCO will steal from ordinary Zambians. Fundanga is peddling a lie!
As Zambians we have to wake up and say enough is enough.These people should not just wake up and impose such things on us.Fundanga knows that his electricity is paid for same with Sisala,Rupiah and his friends.But what about an ordinary Zambian who has lost a job in the mine? Will companies that are strugling already manage this? Thats why i salute the people of Madagascar.The president buys his jet in the midst of so much poverty,people said no to such nonsense march out.But in Zambia we are suffering in the name of peace.As for me,this is not peace but being sleepy.
WHAT DOES ANYONE THINK IF ITS NOT BEING SLEEPY? ZAMBIANS, WAKEUP
YOU GUYZ WATCH WHAT YOU ASK FOR,YOU MIGHT GET IT ALL.!!I I SUGGEST YOU GET MORE DIPLOMATIC WITH YOUR SOLUTIONS.
Said the guy whose bills are all paid by BOZ. He will not feel the pinch so you can accept this pretender to support his other cohorts at exploiting the already exploited
just retire ba mudala you don’t understand paying bills from your pocket.you don’t know what it takes because BOZ pay for you.Think of the poor who can’t manage to pay
You are always thinking in terms of the money the investors will make, what about the locals? what is their gain? You don’t have to be an economist to figure out that Zambia, for a poor country, is very expensive. Despite, Zambia having some of the best safari parks, the country gets the least number of tourists because visiting Zambia on a shoe string budget is impossible. No matter how, Zambia is marketed it’s just a futile venture.
Our goverment is purely clientelistic . There is no difference between our government and the ledership of Mobutu tseseko of former Zaire.The interest is in revenue collection from the poor ,they have created numerous revenue collection bodies and revenue collected is used to maintain their dominant systems and increase their control over resources.Its barely 6 months when Zesco effected the incresed hydro tarriffs and this does not creat a condusive enviroment for promotion of small and medium scale industries.The countries world over are increasing the spendings on social sectors to asssist citizens survive the harsh economic conditons of economic melt down and Zed is doing opposite
Ba Governor… We know that you can afford but that does not mean to say every Zambian has the source of income you luxuriously receive. And by the way in which capacity are you speaking? BOZ or personal? You should actually specify… If anything, you should be telling us of efforts and plans of keeping and putting people in employment so that they can pay that 66% hike being proposed. People are suffering as it is, we expect you to shut it on such matters. Keep it to yourself governor.
Agony is that what fundanga is saying is true.
More reasons for people to start using solar energy system, I presume…
What a dull theory coming from the BOZ governor. Where is this theory coming from? European or African or Zambian? Increase in tariffs increases investment without regard to the social economic situation prevailing in the country. Fundanga be serious man. How are Zambians going to survive? I know what I am talking about. While in Zambia I was getting about K5 Million but still life for me was hard? ZESCO talk time was so expensive I could feel it. How much more are the nurses, teachers, miners and general workers who get less than a million kwacha are affected? This is sad indeed. Now Zambia will be turned into a desert coz charcoal burning will increase.
Almost every one will be using charcoal. This will lead to unprecedented deforestation which will have adverse effects on Zambia. Environmentalists where are you? Cant you see that this proposal will harm the environment of Zambia? Any way Fundanga you are mistaken, if you think you will reap from Zambians for the demand for ZESCO electricity will go down in urban areas. Soon people will be using solar panels and generators? You will lose a lot in the long rum guys. Know that when I come back home I will come with a very good solar panel which I think will be cheap for me than to waste my money on ZESCO electricity. Zambians wake up please, lets fight for our rights to good life.
A really dull theory from this guy. Failure to think clearly and sort out a real issue but to resort to punishing the poor Zambian living in squalor. What are the costs of power in those countries he wants to export to? Does the Zambian get a dividend from the proceeds of these visions should they come to fruition?
DO YOU THINK CHAPS LIKE FUNDANGA CARES ABOUT ZAMBIA TURNING INTO A DESERT? LESS THAN THREE YEAR AGO I HAD GONE TO ZAMBIA. MAN! I COULDN’T BELIEVE WHAT I SAW. ZAMBIA IS QUICKLY TURNING INTO A DESERT. TREES ARE BEING FELLED FOR CHARCOAL AT AN ALARMING SPEED AND THE GOVERNMENT DOESN’T CARE. WE HAVE PLENTY OF COAL. IT SHOULD BE DOMESTICATED-I MEAN USED IN PLACE OF CHARCOAL TO ARREST THE SITUATION.
We all know that does not make any human sense, Zambians need a streamlined solution to the power problem. To ease my mind I pray to God, and watch videos like these, camfed in Zambia on youtube. Please watch these, it shall encourage you. May God bless you all.
The problem with my country is that we keep on increasing the cost of living for our people. People need electricity to improve the quality of life. What will happen now is that deforestation will go up as people look for alternative energy. Even this so called rural electrification will become a white elephant as people in villages can’t afford these high tarrifs. I am surprised that no one is looking at how blooted zesco management is. Zesco has to cut costs for it to survive. There is also need for new MD who might have a different approach. All these problems Zesco is having were not there when Mwasa was MD. Look at how the investors streamlined Zanaco management. It is now efficient
Surely that came from the Governor? Its like this people live in a different world, they do not feel what we feel. If they want to increase production, the government shud put in money not to put more stress on already strained Zambians.
ZMK 110 million a month salary in Zambia can easily make you detached from reality as you can clearely see from the BOZ governor!
the increase sounds insane to me. are they going to increase the salaries by 100% to enable people make it fo the electricity which is always on and off??? zesco has been increasing tarriffs, yet no improvement is seen. we still experience energy problems…. something must be done…they ar just making poor zambians more poorer. the boz governer wont even feel th impact of that insane hike as someone else somehow will b paying fo his energy bills… its unreasonable…. i think we need private investors in energy and telecom sectors……
OK, after reading some of the comments I have come to the conclusion that Zambians just blabber about even things they have very little understanding for. They tend to confuse business economics with social economics so I will just place my two cents. Before I post, I forgot that this was Lusaka Times so the chances of me finding intelligent comments not filled with hate and speculation are extremely low.
For those interesting in reading what I have to say, it will be a long post.
edited : please do not insult the intelligence of other LT bloggers or else you will be put on moderation
edited : please do not insult the intelligence of other LT bloggers or else you will be put on moderation
I deserve that LT and I am sorry. It will never happen again.
And where was your economics study carried out? No need to apply far fetched analysis when the solution being considered is clearly absurd. No need for X-Y axis here when you consider that economics is firstly a social science. Social means to do with people. The overall effect of economics and its principles is to better those people. And clearly no one will be better off in the short or long run with such measures regardless of how you plot your smart curves. The organisation advocating such measures should first start to have its employees paid the average Zambian salary and also pay for their electricity too and see how much economics is applied to such decisions.
Zambia electricity consumption is comprised of both commercial, industrial and household consumption. The generation of electricity is expensive and very limited and only a limited amount of electricity is generated and this is not enough to cater for the whole nations electricity needs. We experienced/ are experiencing load shedding due to electricity shortages and poor infrastructure.
Capital needed to generate electricity is limited and expensive and companies do need to make profits if they are to survive. [tbc
Thank you!!!I am being shot down for saying ZESCO needs to raise money!!I am glad we think alike!!I do not understand ppl’s lack of logic!!
Now here are some basics of economics.
There is a demand curve and there is a supply curve. These curves are placed on a graph which has on the Y-axis the price and on the X-axis the quantity. The demand curve is generally downward sloping and the supply curve is upward slopping.
The basics go like this, when the price is high, less quantity is demanded. When price is high, more quantity is supplied. When price is low, more quantity is demanded and less quantity is supplied. These changes move around until an equilibrium is reached.
Starting from your basics economics example, before you plot a a demand supply graph ,you need to know the nature of a product or service under analysis. Electricity is not normal service or product ,this product is like mealie meal and Fuel .These products are demanded at any price level ,you cannot stop paying for electricity or buying mealie meal because tariffs or prices are high you due to the reason that you cannot function without these basic n.Thus it follows that the supply surve for electricity and mealie meal is upward -vertical(perfectly unelastic) and prices are horizontal , any shift in prices has little effect on supply. Other assumpt are that these have no close substitutes
I have to disagree. Electricity is not perfectly inelastic but rather highly inelastic.
Consumers still have the option to consume less electricity. Use gas stoves, buy energy efficient appliances, energy efficient bulbs, monitor the way you consume electricity (why watch TV all day, read a book or pay your friend a visit), etc.
The same can be said with mealie meal. Next time, try cassava meal if it is cheaper than mealie meal.
We are human beings and part of being human is to be able to adjust our behaviour due to certain circumstances. The high oil prices we had last year led to a boom in garages that convert petrol cars to electric cars. I am pretty sure we can find ways to
reduce electricity consumption.
There are also people who can find an opportunity here to use their entrepreneurial skills in such a situation.
Import gas stoves, sell them and start selling the gas used in the stoves. If consumers find it too expensive to use electric stoves, they will most definitely jump to this alternative.
You can also import solar panels and sell them on the market.
The is free market economics. Where there is a need, there is a way.
Yes you are right , in practicle sense no commodity is perfectly inelastic but theoretically it perfectly inelastic and does not bear any positive relationship between demand and supply. And thus it follows that your example of demand supply example is is extreamly out of phase from all angles of contetion.
Hello Luapula Fish.
There is a relationship between demand and supply. In my example I only used price because price is the easiest factor to use when explaining demand and supply but If I added stuff like population, income, substitutes, complements, etc, you would find the curve getting more and more elastic as you add more and more factors.
If you narrow it down to price and price only, then you are right but if you add other factors, your assumption does not hold any ground.
I am sorry, I appreciate your input on that one but I will have to stick to my guns.
Now Maestro made a comment challenging Dr. Fudanga on private investment and I disagree with Maestro but agree with Fudanga.
As I pointed out above, only when the price is high is when companies are willing to produce more because they can make more profit. Private investment is generally profit driven. With the price hikes, private companies will be willing to invest in the sector because they’ll be able to make profits and generate a return on their investments. This will also tackle the load shedding problem as consumers will consume electricity responsibly. [tbc
While there is certainly a lot of sense in your posting and Dr Fundanga’s, I believe that Zambia people will be pushed too much with this tariff increase. Whatever the case, I hope the resultant effect will not be that people will begin looking for alternatives like Solar Power and Malasha. Later.
Your lack of understanding of economics, so called professor, is truly shocking! You seem not to be aware that Zesco is a monopoly? What private investment are you referring to? Entry barriers into the industry are evident. The introduction of a competitor (i.e. private investment) will in effect drive prices down. Which supply and demand curves are you plotting in that narrow mind of yours? Am in no doubt that your study of economics was done in Zambia. Where the economy is itself a failure which is testimony of it being ranked consistently one of the poorest. Your qualifications are therefore of no use to anyone in the world.
Dr. Fudanga’s comment was mainly directed to private sector investment and he is very right because it is true.
Think of it this way, if someone started a business making bricks and made huge profits, everyone would want to start making bricks because they would also want to make the same profits that the first person was making. Therefore that would mean the brick making business is profitable.
We saw this with the lodging industry, luxury bus industry and generally detergent industries in Zambia.
The same will happen in the electricity industry if private investors see a return on their investment.
The trouble with you chaps is you read those economics books blindly. Look at the measures the west has taken to counter the global credit crunch. Tell me which books they used to formulate those plans? Read the models, learn from them and think how best to apply the knowledge you have. Not just plotting supply and demand curves. Its no wonder Zambia is one of the poorest countries in the world based on your poor and simplistic (X-Y supply and demand curves) application and the likes of your governor. Most of those so called laws are made with warnings. One of them is ceteris paribus. Thats a hint enough not to follow them blindly.
100% right man. Zambians lack rational analysis. They stick to assumptions of X and Y supply demand curves.
Good criticism… I happen to agree with the governor unfortunately but I crave to know what you propose because it sounds like you are more competent than the governor of the central bank!Is that what you are insinuating?Y are not the governor or atleast on a panel helping us solve this crisis?
Some dont forget those are appointed positions.. there many others who can run the central bank. Solution is fire the current crop of heads and find ones that have a better solutions.
Now on many consumers who will be affected. I am sorry that you will be affected but if we are to have an efficient electricity industry in Zambia, we must make certain decisions. Often good policy is not supported by the public.
We can however make certain adjustments to fit the new price hike.
-Turn off all the lights and unplug all your appliances (except the fridge and freezer) when going to sleep.
-Only turn on the TV when you are watching it. If you are done watching it, switch it off.
-Limit the hours you spend on the computer. You can spend your other spare time reading a novel or some form of informative reading you find interesting.
– Buy energy efficient appliances. There is no point in you buying a large stereo if you don’t get to use it to its full potential.
-etc.
[I end here]
Increase in hydro tarriffs will have little or no effect on the supply side of electricity because of the monopolistic supply of the service ,and lack of competitors have has also meant that consumers have to do with the only available service . Zesco have been increasing tarriffs in the past and little has been done to increase power generation. In the actual fact Zesco has been struggling to maintain its normal supply capacity for the nation. I can agree with your example ,if we consisered Electricity to be a normal service supplied in a competitive market were demand will positevely relate to supply.This is a very contrary case were consumers have no little or no say on service supply.
The price hike will encourage private investors to enter the market thereby providing an alternative to ZESCO. That is what Fudanga is saying here.
Just a few weeks ago, RB was encouraging investors to invest in Zambia’s electricity sector.
This means the sector is liberalized. Investors just currently don’t see a return on the investment. With the hike, this norm might change.
Man Iam afraid of your course of reasoning. Are suggesting that the prevous hike have not been good enough to attract investmnent in the sector? Are you also overlooking the the state instruments that have prevented private investment entry into the sector and the implications flooding the utility supply with private investments ? The utility sector cannot be fully liberalised ,state instruments will always be in place to regulate and minimise the action and number of would be players.
Well Luapula fishj, judging from the outcome, I am suggesting the previous hike did little to attract investment mostly because there has been no private investment in the sector (unless I am wrong).
On the comment you made about the utility sector not being fully liberalized, I am curious to find out some of the reasons as to why you state this.
And finally I just wanted to ask a question that is somewhat related. When you go to Zambia, which cellular-communications company do you usually go for (Cell-Z, Zain, MTN) and why?
Is this the best you can do after calling other bloggers’ comments “dumb”?
Find what I have said that you disagree with and post a rebuttal.
And yes, that is the best I could do because I have to dumb it down somehow for a LT blogger to understand.
Why insult the credibility of Dr. Fudanga (not necessarily you but some bloggers).
I am 4 Dr Fundanga and I believe he has the interests of the Zambians at heart!!You go governor of BoZ!!!All those who disagree BITE ME!!!
You mean he has the same Zambians that live in abject poverty. The very Zambians that can hardly afford to feed themselves. The very Zambians That live in a run down country, albeit run by the likes of him. Bite you? You need a smacking instead to wake up from your slumber..
Its kind of interesting it may seem for now like an evil to hike the tarrifs but the nd result will be good. when this results in export of electricity to South Africa and more other place its good for forex. and better income for the government meaning our kwacha may appreciate as well. And as a result electricity may seem to become reasonable for the Zambians.
I just wanted to apologize to all bloggers for calling your comments dumb. I was out of line and I hope you all accept my apology.
You are welcome, other than that; I am in total agreement with your analysis, though ZESCO/GRZ couldn’t have picked a worse time to announce this.
Hello Dark Knight.
I guess you are right but we need investment in this sector.
Thanks for seeing your own wrong and apologizing. I think there is really no such things as dumb questions or comments when you are trying to solve an issue and I believe this site give people from all levels of education to comment and it is important for us the highly educated to get some reverse mentoring to just see how and what our Kids are thinking about than just attack their views as dumb
Back to your long post, yes what you said is text book economic stuff and correct. But reality is big consumers of electricity are mines and industries and those can afford 66 % and lets hike for them. The guy in Matero compound trying to watch Zambia Vs Egypt could be targeted by a small…
No is wrong even going by basic text book economics . Electricity is like like other normal products that follows the the positive relationship between demand and supply. The positive relationship is also derived under the assumption of free market economy, but its no longer a free market enviroment when Zesco is the sole supplier of the service.
Luapula Fish
ZESCO is the sole provider but that is not to say govt has blocked any investor from entering this market.
Just the other day, RB was urging investors to invest in this sector. That means the market is open to all.
It is common knowledge that government has been blocking private investment into national hydro company ,and its only recently that Govt expressed interested in inviting foreighn investment in this sector. The govt is not inviting investment into the energy sector with a free will, Zesco owes the world Bank huge amount of debt and it is under pressure to repay back the loans .
It is common knowledge that government has been blocking private investment into national hydro company
Well I cannot fully agree with this statement because I do not know it to be true or false. I cannot prove it nor do I have the evidence to refute/support it. Maybe you know something I don’t know.
On the issue of investment. Last time RB was talking about coal plants. I would like to know how private investment in electricity supply in Coal plants has a connection with ZESCO.
To Prof Free-Market Capitalist; I will leave it to someone else to consider my opinion as educated. Your “economics” assessment is only supported by the “reverse causality model” and is only scratching the surface. Even your specifics using Economics jargon is standing on one leg, as one can dismiss them by switching a few factors based on the same reverse causality. You’ve not taken into consideration why a company which has extreme potential has failed to capitalize itself through banks and its only solution is “taxing” Zambians. If truly you are a free market capitalist you will understand that capitalism is survival of the fittest, and ZESCO has clearly cannot be described as…
Hello CM Mumba
First again I want to apologize for some of the insulting un-called for statements I made.
How I read what you have said but I think you have mixed up a few issues. ZESCO is not a private institution and so it enjoys the monopoly power awarded to it by the state. Free market economics cannot be applied to ZESCO.
If ZESCO is inefficient, let other investors take part in the sector. That was Dr. Fudanga’s point. If the prices are high, there will be more investors and probably more efficient ones. That is the free market. Easy entry and exit. Yes I have missed out some points but I didn’t have enough time to start explaining every single point. I had to leave out…
cont’d…and ZESCO clearly cannot be described as “fit”. There is a reason why Fundanga said what he has said as I stated in my earlier posting. ZESCO’s ROOT problem is it’s modus operandi. It requires a complete overhaul. . We know that these parastatals are ineffective. I have no doubt in my mind that ZESCO has approached banks to capitalize it, but banks cannot finance a corporation which is run like a chicken farm. So ZESCO along with Fundanga have seen that the only way out is increasing tarriffs. It is a total lie that there is no other way they can raise capital. And mark my words- if this goes ahead BEFORE ZESCO’s management is resructured- it won’t be the last tarriff…
cont’d it won’t be the last tarriff increase. Fundanga’s reasoning is understandably narrow-minded (he who pays the piper plays the tune). Bottom line is there’s no justification for ZESCO to get a bailout from Zambians who themselves require a bailout. Tell me Mr. Free Market Capitalist why ZESCO has failed to get even a multi-lateral loan, as surely with a proper plan-…they are a viable company well-positioned for success? I am afraid sir, you are peddling a a politicians lie; I wonder when us Zambians will learn.
Well I think you missed my point CM Mumba but I will address some issues you have brought up.
ZESCO is not getting a bail-out but rather increasing tarriffs. This is normal for companies that experience high demand in the commodity they are selling. In order to bring about efficient electricity supply and peg the load shedding problem I assume, they have to hike the tariffs so as to get some people to use less electricity therefore having enough to go around. The hike is justified in this sense.
Why ZESCO has failed to get a loan is probably because it could not make reasonable profits due to low tariffs which in this sense justifies the tariff hike once again.
We will ignore the fellow above. Market Capitalist. My argument with you as that you are not looking at the ROOT of ZESCO’s problems. Taking the view that ZESCO getting more money for their operations considering the company’s CORPORATE Management ineffieciency is jumping the gun, as well as a simplistic assessment of the situation. ZESCO was not formed yesterday- they should have the capacity to know that load shedding would be an issue, but due to inept management, it finds itself in this quandry. Consider carefully sir, that a tarriff increase cannot be a “first resort”, assuming we have a company run by a govt which wants to appease its citizens. No bank in its right mind can risk…
ZESCO money (and I am speaking from experience having worked for a bank whichg used to buy try and salvage companies going into bankruptcy). It’s operation needs to be unbundled first into different components; to be more effective. It remains a risk because its current strucuring is so ineffective. We have a company which, generates electricity, distributes electricity, and does all it’s own billing, operating under one roof?….Sorry I digress, but I hope I make a point…have to go- nice chatting with you.
Hello CM Mumba
He said increasing tariffs would allow the expansion of electricity generation in the country, as it would attract private investment.[The above article]
ZESCO is a public institution. If it’s price hike was solely for ZESCO itself, then I would be against it but Dr. Fudangs brought about the above point. It is investment in the sector that has caused me to support the hike (in this case private investment).
ZESCO does have problems, which is why we must have efficiently run private institutions to provide an alternative to ZESCO so we cannot be stuck with ZESCO’s problems.
Hello CM Mumba
He said increasing tariffs would allow the expansion of electricity generation in the country, as it would attract private investment.[The above article]
ZESCO is a public institution. If it’s price hike was solely for ZESCO itself, then I would be against it but the BOZ Gov brought about the above point. It is investment in the sector that has caused me to support the hike (in this case private investment).
ZESCO does have problems, which is why we must have efficiently run private institutions to provide an alternative to ZESCO so we cannot be stuck with ZESCO’s problems.
Iwe Prof Free-Market Capitalist here’s something you can chart on your XY Graph as it was slowly built up; (1)Reading that you failed to differentiate btn Zambian Watchdog and LT brings your intelligence into question (2)Reading your economics reveiw confirmed my suspiscion on your intelligence. (3) Reading further claiming that you dumbed it down for LT readers made me realise I wasted my 3 minutes. Now LT- where do I get my 3 mins back? This self professed Professor is wasting space by making grand remarks as an opening. Thinking his better than others- what a prick.
I like the fact that you ignored my comment on #34.
I have just wasted another of your 10 sec.
Have a nice day.
Hello FMC, i thought you bid farewell sometime last week.Welcome back nevertheless…..
Hello Baby C.
It was just for today because I cant just watch people ridicule Fudanga.
I have great respect for this man. Back to my rocking chair I go.
In Malaysia the government covers the minimal cost of electricity for residential. We need to discriminately price electricity depending on residential area and also business size. Of course exports can cost more.
Market Capitalist I eant we will ignore Kabompo NOT YOU- my mistake too tired- need to sleep.
Hey CM Mumba,
my comments are awaiting moderation so you might have to check back tomorrow. I did have a nice time chatting with you and once again, I apologize to all bloggers for my rude comments.
I stopped blogging on LT and I just had to comment on this story because many bloggers where lashing out at the BOZ Gov who I respect.
Maybe next time I might blog again. Have a good week.
How does economic growth mix with tarriff hikes for electric power, a major requirement in all manner of production? The stupidity here is hitting the lunatic level!
The increament in electricity tarrifs should be matched with a similar increament in salaries for all workers in the country. This increament will push electricity beyond the reach of the rural folk.
yebo…….well said and laid but does this man Mr Gov´t overstand or understand such issues.
66% is a huge increase at a go. Why not increase progressively in not-so-alarming jumps? There are also alternatives, like securing bilateral funds to set up generating plants for power just for export & you can apply your profitable tarrifs there.
66% is just too much,these guys should be able to have a look at the ecconomic situation and open up them earing with understanding.First,it was the passport and guess you the so called gov´t and the rest made alot but still you wanna get more.Though yesterday is history,tommorrow remains a mystic.
Thats the problem with Africans- no love for other people. Just because BOZ pays for him he thinks it is not a problem to pay the extra 66%. If people are struggling to pay at the current rate how does he expect them to afford the increased tarrif. Like I ‘ve said obtaining a degree in economics is in itself enough- one has got to have deep perception to discern situations- those books you read at University were written by some one who used his imagination so you now have also to do the same instead of theorising all the time. Uwikwite asontela ubwali kukanwa shouldnt be our philophy because you never know when you be hungry yourself.
I propose a 10% increase annually. After six years they can get there 66%
I propose 6.6% annual increament, in 10yrs they can have their 66%! How does that look Zeus?
You people could sign your own death warrants. 6.6% increase annually for 10 years is equivalent to 89.48% of the current amount in increase after 10 years. Its called compound interest.
ridiculous !!!
From the tone of Fundanga’s voice, I hear a lot of sense in this. But wats the implication of this sense on the poor? Maybe Fundanga sh’d be president one day. Actually from Kaunda we sh’d have had Mwanawasa and then Fundanga… Chiluba sh’d not have been there. Wat a lost decade!
Whats needed is to liberalise the sector so that Calebs dream can be realized
ZESCO want to pass on their inefficiencies on to the consumers!!!! I agree that some increment MAY be necessary but they have not shown any effort to reduce their costs!!! I bet the organisation is overstaffed & probably has some lax controls in say fuel usage, travel allowances and the like….the economy in the 3E’s probably isn’t being followed fully. Another thing that can be done, that is if national security will not be compromised, is rent out office space in their various outlets, some of them are huge, with equally huge TV’s in them!!!
I have great respect for the BOZ governor but on this one, the score is zero!!!
sweetie that is very true.Mr fundaga thinks he has the final say.what investers is zesco going to attract?is it Indians or Chines.please lets kick these fools out of office in 2011.baby c continue being sweet.
thank you baby c keep it up
Sininazibe that Fundanga belongs to the “Anyandule club” as sung by Petersen. Anyway he does not pay for Electricity.
Thats the biggest pile of rubbish i have ever heard, i dont expect that to come from the Bank of Zambia Governor. Even the current tarrifs people are finding it very hard to pay, what more when they increase?
excellent talk my brother please keep it up and let zesco know the truth about the economic situation.this is the worst time to increase anything. Fundaga should talk about improving the economy and not the zesco rabbish.
Ba kamunyama bushe nimwe mwe be paya abantu.you are such a very daluu like mr fundanga himself.how could you say that Zambians are used to free things.uli musungwa ayi?
Ba muze i have also read this kamunyamas comment and iam equally anoyed. I think he does not know to pay bills.
He who will not apply himself to business, eventually discovers that he means to get his bread by cheating, stealing, or begging, or else is wholly void of reason.
I thought caleb had enough calibre
…Ischomachus, also note that …A man is likely to mind his own business, when it is worth minding. When it is not, he takes his mind off his own meaningless affairs by minding other people’s business.
Also remember that a hard thing about business is minding your own
This is coming from a man earning more than $20,000 salary per month. Sure he can afford…But can the normal Zambian afford. It does not make sense for a man who has been to university to fail to come up with a better solution than by just increasing prices to pass on costs to ordinary citizens.
And they say universities are full of intellectuals. Even a grade seven can implement a price increment.
The result of not being grounded and not looking outside his window on the way to his office.. Not forgetting that those same people will be voting in 2011.
Brainless statement from a supposedly brainy person..
Mr. Fundanga can afford but most of us Zambians will not afford becuase the percentage is too high and also the time at which ZESCO has done this not good when alot of people are not even affording a meal most of the them have lost jobs but the government is not putting any measures into it.
Mr. fundanga shouldnt just be agreeing to issues suiting to rich people what about the poor?
Bottom line is this ppl…Money has to be raised ZESCO has been making losses and this is the only viable way to raise funds..Yes 66% percent is a lil extreme but these are times of extreme economic problems wich should be mirrored by extreme measures!!The BoZ governor has been in office for sometime, surely he his competent enough to know why he approves of the 66% tariff hike..Times are tough and we have to tighten our belts!!If this reaps the rewards it should reap then we will have money being injected into the Zambian economy:-)
How much is your electricity power bill and how much do you earn? Do a simple ratio analysis and say if thats a normal ratio to pay for an essential, albeit one essential. Unless you also get paid tens of thousands of dollars a month??
Mediocre analysi!!!
Tightening our belts when you are loosening? Time is near for reckoning is dawning on all you useless economists. do you understand the implications of increasing the tarriffs?
I am not obliged to agree with either of you
I agree with you ba realist09. Then again no one is obliged to agree with yours.
Ba governor, mwilayangala iyo, 66% is too much when you know that companies are not increasing salaries. Where do you think we will get the money from? Our MPs please kwateni amono and opposse this move.
Iwe free market whatever you call yourself.Respect yourself dont think we are….on this blog okay.edited
What an…… statement by the Govenor. Zambians earn the least in economic comparisons and yet they are one of the most taxed paople on earth. All countries are deriving stimulus plans for their economies with the current recession in order to put more money in people’s pockets. Even extremely rich countries like the US can never think of such nonsense despite the fact that people there earn loads more than poor Zambians. Zambians also should learn to protest against such rubbish. If I was in Zed I would surely organise one. 66% increase is just ….. to say the least. What kind of economist is Fundanga? Too much whiskey ba Govenor edited
Twaletwa again. Who’s supporting tariff hikes? Abamatobo with big tummies called pot bellies. uBuchushi tababwishiba iyo. First someone in the corner will yell! “Trade unions, this year be reasonable in demanding for workers payrise!” aluding to the economic chatile or etc. As if they live on different planet, yet another guy shouts ” I applaud Zesco’s proposed 66% tariff shift”; bakamba ba Caleb naimwe Guys Mulinama or just people like us. Are we subdising some industries. Ok why not applaude a 10% hike why the colodsal 66%. OWWWWWEEEEE pa Zed pashupa. 🙁 Iam sure Sisala loadshedding apo ekele ni all smiles chabe. Alo we mwina zambia gaiwe finshi walalunda. Mulechimona.
Mr Fundanga is habitually drunk on expensive whisky thats why he supports such nonsense. In fact his salary is above normal such that he has lost touch with reality. Domestic consumers of electricity in Zambia have been paying more than the so called investors in the mines. Despite the fact that 50% electricity usage in the country ‘was’ by the mines, the revenues collected by Zesco from the same miners was about 30% because they are highly subsidised by the grz. Why should the Zambian proletariate continue to bear the misfortune of paying bills for the investors. At the slightest sign of trouble, investors close shop & run! Learn
Like I said earlier, “ZMK 110 million a month salary in Zambia can easily make you detached from reality as you can clearly see from the BOZ governor!”
And this is the guy people tout as future Presidential material! What rock did he just crawl under from going with what’s happening to the poor Zambian worker, laid off miners and the global economy in general, 66%!!!!!
Men at work. That’s RB’s government. How many Zambians will afford the 66% hike? I don’t think this can happen when it is an election time. Zambians wake up and smell the coffee!!!!
Shibumi and Dark Knight thats the truth,the man has lost touch with reality,like a dead fish that follows the stream,he has started following the wagon track so closely .Just because he is from a privileged class he sees 66% as nothing.The man has just over stayed in that office governing a valueless kwacha ,we need some young bloods that are constantly in check with reality,we need some changes.Politicians, like underwear, should be changed often, and for the same reasons.
I think the Governor was drunk when passing the comment. Can it be that he’s confusing tariff hiking with power generation? If that is the case, I wouldnt be suprised!! If siliya, a journalist / Minister, yesterday told the judge Dennis Chirwa Tribunal that she did not understand what the word “nullity” meant as highlighted in the Attorney General’s legal opinion over the RP Capital memorandum of understanding (MoU), what about Fundanga an economist?
this is pants
Unemployment is rising…ordinary people have no money. When did Fundanga last see an electricity bill through his door…probably never as these guys’ bills are paid for by our tax payers. This is ill thinking…and very disappointing indeed!!!
pamatako..chi Kalebu
This punk must be replaced by a sound person,he is full of 5h!t
I’m not done with this piece of 5h!t fundanga.If I had a gun,I’d blow his fcunkig brains out.
Zambians are full of talk , talk and talk shop. Comments that have been posted hear make sad reading when I think of an ordinary zambian paying for electricity from his meagre resources.. My question is WHERE IS PF, UPND, AND VARIOUS NGOs when all this mess is being smeared on the ordinary Zambian? Raise up and fight for the common man. This is where you come in. Hold peaceful demonstrations against THIS UNGODLY electricity tariff hike. PROTEST BECAOUSE YOU CARE FOR THE ORDINARY ZAMBIAN. Fundanga you have turned a blind eye to the ethics of economics: THE WELFARE OF THE PEOPLE THATS WHAT ECONOMICS IS ALL ABOUT. Fundanga go and revise your economics pliz. Shame on you.
As for ZESCO, expect more illegal connections and sabotage of your transformers as a result of your tariff hikes. If you push people in a tight corner, underhand methods take the toll. Why can’t ZAMBIAN LEADERS EVER FEEL FOR AN AVERAGE ZAMBIAN??? FUNDANGA WHAT YOU GET FOR YOUR SALARY PER MONTH CAN FEED 100 FAMILIES IN ZAMBIA. SO SHUT THE F***K UP IF YOU GOT NOTHING BETTER TO SAY TO THE ZAMBIANS
AND WE HAVE THE WORST PRESIDENT EVER!!! WHAT HAS ZAMBIA DONE TO DESERVE SUCH SELFISH LEADERS??? RUPIAH BANDA IS NOT FIT TO BE THE PRESIDENT. CHANCING CHABE. MWANAWASA HAD AT 43% OF VOTES AS FOR RUPIAH ONLY 728,000 VOTES OUT OF 3.5 MILLION VOTERS. TOTAL NONSENSE
It’s really sad for the Governor to pass such nonsese without any analysis of what is happening on the ground,currently pipo cannot afford present ZESCO charges that have continued to be high and yet electricity is generated just behins our back yard.
It seems to me that africa is it Zambia in particular does not learn.We have gone full circle and come back to where started. There was a time when ba KK was told that the citizenary at large should contribute to public services & at that time ba KK turn down that suggestion for purposes of myopic political reasons. Today those of us expending are having to pay not only today’s real cost but also the subside of yesteryears.The new finance minister does have any meaningful sources of revenue & there he goes zesco. We have been singing about broadening the tax base for donkey years.EDUCATED FOR WHAT??????? INDEED??????
There are plenty factors righht now that are sitting in our favour.These should enable us to go flat out doing the right thing. The population is small, resources are plenty. A time will come when these variables will change and at that time if we shall still be tallking about these same things, I will not be surprised to hear countries being surrendered to western worlds. Looks far fetched but can happen.
TO GRZ, ZESCO and FUNDANGA..Get a loan to develop the Hydro sector and lets see if you will be able to export to South Africa, Namibia, Botswana and East Africa etc. The problem we have in this country is poor planning and lack of foresight..and we have a problem when it comes to choosing leaders. How i wished KK quit after 10 years to pave way for say John Mwanakatwe……things would have been different!!!….
Youre forgetting your dream leadership would be heading the same crop of under performers. What happened after Chiluba and colleagues took over? Take responsibility Zambians and stop day dreaming. Its not poor leadership we have had. If you really want to find the problem look in the mirror. . .
Fundanga is on the right track,
The problem with our way of thinking is that we never want to think strategically.
We only think abbout what affects us today, and not what will affect our kids tomorrow, not even oursevelves tomorrow.
We need to allow zesco to operate economic tarrifs, and also allow the industry to attarct private investment so that once investment has grown we can then enjoy not only stable tariffs over longer periods but also strengthern other areas of our economy which demands the use of electric energy.
If the people of yesterday did not invest in the production equipment we are using today the discussion on tariffs would not even be their today.
Very poor thinking. Try being a call boy or call girl. With that level of understanding you would suit very well. Your brain has not even processed the information available or pertinent questions it needs to ask. Where you live? What the average wage of the people in that country is. How the figure of 66% was arrived at. Exactly what investment if any would be undertaken and the proposed budgets. What happens to the investment returns if any. How efficient current operations are.
walasa man…..Fine or is 4 in Bemba?? he lacks rational and analitical capacity. Awe ba fine bena…nikatwishi.