Friday, March 29, 2024

Govt to ensure electricity tariffs are high enough to attract investment

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Energy and Water Development Minster Kenneth Konga
Energy and Water Development Minister Kenneth Konga

Energy and Water Development Minister Kenneth Konga says government is committed to ensuring that electricity tariffs meet the cost reflective level to attract investors in the energy sector.

Mr Konga said today that there is need for Zambia to adjust its electricity tariffs if it is to record substantial investment in the energy sector.

Mr. Konga was speaking when he made a submission on the status of electricity in Zambia at the on going tripartite high level conference on the North – South corridor in Lusaka, today.

He explained that Zambia just like many African countries lacks proper investment in the energy sector due to low tariffs levels.

” There is need for all countries in the Common Market for Eastern and Southern Africa (COMESA), Southern African Developing Communities (SADC) and the Eastern African Communities (EAC) regions, who form the corridor, to adjust their energy tariffs,” said the minister.

The Minister said the sector can contribute positively to the economic growth of developmental activities within the three regions if it is properly utilized.

Mr. Konga further called for private sector participation in developing the energy infrastructure in the corridor adding that developed energy infrastructure also plays an important role in attracting investor’s confidence.

He added stakeholders should come on board and ensure that all energy developmental projects are adequately funded.

Meanwhile Mr. Konga has maintained that electricity tariffs in Zambia will continue to be adjusted upwards until the cost reflective level is met, adding that this is expected only after all power rehabilitation projects in the country are completed.

He has however called on members of the public to support government’s initiative of adjusting power tariffs upwards if the cost reflective level is to be achieved.

And speaking earlier Southern Africa Power Pool (SAPP) Cordination centre Manager Lawrence Musaba has disclosed that US$ over 4.7 billion is required to improve the current power generation capacity.

Mr. Musaba explained that the current capacity of power in the Southern region is far below the required installed capacity of 55 Mega Watts (MW).

He noted that out of the required installed capacity of 55 MW, only about 46 MW is available to service all the economic growth taking place in the countries, saying this has resulted in power shortfalls causing massive loading shedding.

He pointed out this also has affected the level of investment by both local and foreign investor in SADC countries.

He added that there is need to come up with infrastructure development such as least cost generating facilities that will improve the quality of energy been generated in the region.

Mr. Musaba cited that on -going major power rehabilitation projects in Zambia and Zimbabwe as having contributed to the power deficit in the region.

He further added that there is also need for SADC member states to devise measures that will ensure successful implementation of the cost reflective and time use tariffs within their countries that will provide incentives in the energy sector for both local and for foreign investors.

Meanwhile, the World Bank has pledged over US$700,000 million worth of support to SAPP for improvement of the power generation capacity.

The three year support will be used towards financing various energy developmental projects such as the Zambia- Tanzania-Kenya and the Burundi-Democratic Republic of Congo interconnectors among others.

The interconnectors which are expected to be commissioned by 2013 will generate an additional of more than 1Mega Watts’s power capacity.

ZANIS/MM/ENDS/MM

44 COMMENTS

  1. Mr Konga why are youbforcing your neighbours to adjust their tariffs? they have other means of collecting revenue and understand that low tariffs and business graft.

  2. Jamaco 4-0 to Barca now. That in the first half only. Sorry not rubbing it in but I hate German teams. They are so negative, barring the result Bayern got in the last round.

  3. At last. This is what all potential investors have been waiting for. Once there’s enough competition, prices will naturally stabilise, so the consumer has no need to worry.

    3RqU Bayern is really being torn apart. Barca is displaying premium soccer at it’s finest. If the Zambian national team had only 2 players like Messi & Henry alongside Chris Katongo, we would have no worries.

  4. All I can deduce from the speech by the Hon Konga , is a slippery statement avoiding to say it straight that ,well no 66% increase in electricity tariffs as earlier stated but some how expect some increase……the magnitude not stated

  5. Bayern I am disappointed 4:0 !! This is not true. Nine Chale where are you mudala? This is bad. iyeeeeeeeeeeeeeeeeeeeeeeeeeee

  6. Nine Chale you are right. All we need is about 2-3 players. How I hope we could make it to SA. I definitely would be travelling. My God! B l o o d y Chavs have scored! 2-1 to Chelski!

  7. What I am finding difficult is that no one is explaining why the costs are so high to justify 66% increase???/

  8. But to a certain extent we in zambia have taken Electricity to be cheap.in the devloped world you hardly find them using Electric stoves not even heaters.they use gas stoves and firewood for house warming.but here you find that when the ka two plate is switched on in the morning.first bathing water for the big boss is warmed infact boiled,there after it is bonzo meat or ichifu which is cooked then nshima and before going to sleep it’s beans which is cooked into the following day.even our neighbours in botswana who have an economy which can stand up to some of the tume european countries are very conservative with their electricity.infact what you see on their roof tops are big solar panels for water warming.

  9. On “He explained that Zambia just like many African countries lacks proper investment in the energy sector due to low tariffs levels”, can Minister konga give us proof of his expalantion expressed here-in, please.

    I am tired of this hear say thing and I need proofs of such clamis the Minister is talking about. Also, please GRZ, consider doing the action undertaker has suggested above that you increase the salaries of civil servant by the same margin you will increase the electricity tarriffs.
    In fact, I am appealing to you GRZ to increase the said salaries by double the amount you will be increasing the tarriffs so that you can help them meet the increases of Mealie Meal, associated family household monthly goods and other useful foods.

  10. I cant really believe this nonsense. You have 20% population that uses electricity and when you hike, the number is likely to come down, say to 18%. Now explain to me you lizard where the new investors are going to sale the so much anticipated increase in electricity at that high tarif rate. Does this really make sense to people who have been to school sure???

  11. Forget about exporting as the other countries are unlike Zambia investing hevily in electricity ventures. Besides if the reason increasing tarif as the Bank governor mislead people, is to export, you can make your investement and export at a high price even now without really pushing tarifs high for local people??. The reason why tarifa are low there is simply because salaries are aslo extremely dismal SWAIN

  12. #14 At the moment gas is more expensive than electricity. Stop being a big time Charlie. If you have economy 7, you are likely to pay less than one who has a boiler. I am still not convienced increasing the price is the answer. People are already struggling to pay what happens after the tarrifs are increased? One cooking beans and the rest you have talked about, sorry you are being very unrealistic. Beans is obviously cheap but yes it costs to prepare it. If you had to ask, all people in Chibolya, George, Matero would want to eat meat everyday. But is that a possibility?

  13. Gday Ba Wise fimo fimo,
    You have made me laugh. What do you exactly mean in hear ??? hahhhhhhh

  14. See, I have difficulties understanding these politicians. Probably I’m the only one with a different perspective. The attraction of foreign investment in this situation is only feasible in high tariffs. How about initiatives like wind power, solar that we Zambi-can can do-something basic. Why are we so reliant on foreign investment? Some times i feel very insulted that we should be looking up to foreign brains.

  15. Maestro says:Also, please GRZ, consider doing the action undertaker has suggested above that you increase the salaries of civil servant by the same margin you will increase the electricity tarriffs.

    This is not going to work. Such an action will cause INFLATION which will harm the economy. The right action to take is either to lower taxes so the hike can be affordable or to increase taxes and not increase the electricity tariffs so our tax money can pay for ZESCO’s losses. The two choices are there for everyone to pick.

  16. The figure of 55 MW attributed to Mr Musaba cannot be right when South Africa alone consumes 40,000 MW and Zambia’s installed capacity is 1,700 MW. Have the zeros been truncated like on the Zimbabwean dollar? Cost reflective tariff? Yes but not when they are based on high ZESCO labour costs and losses on the 2/3 unmetered consumers. Gvts can wait for 50 yrs to get a return on investment. And in fact the life cycle of a hydro project is 50 years. A private investor cannot wait. Gvt should not abrogate its responsibility of funding big capital projects like hydorpower projects. KK did it. Why cant you did it?

  17. LT…its MINISTER. not minster naimwe sure!…………..uv said it over and over wrongly…….hmm hope am not the one whose wrong

  18. Wait until you all come out of those positions will you feel the pinch of that stupid idea that you and your government want to implement, right now it may seem to be a good idea because of un taxed huge salaries that you award yourselves, but what about other people who get paid less, what about them? we shall find other means and see what will come out of that idea.

  19. I dont understand. What I know is for GRZ to allow anyone who wants to invest in ernrgy and then the investor him self will determine what to sell his product at. This will decide whether it worthwhile to venture into this business

  20. Wait until you all come out of those positions will you feel the pinch of that s t u p i d idea that you and your government want to implement, right now it may seem to be a good idea because of un taxed huge salaries that you award yourselves, but what about other people who get paid less, what about them? we shall find other means and see what will come out of that idea.

  21. 23, greetings and thanks on your “This is not going to work. Such an action will cause INFLATION which will harm the economy”. However, I am digesting your input to qualify it or not. Later.

  22. Why is it that people who do not pay from their pockets are the most vocal?
    Which investment are they talking about? Investors coming into the country or expansion programs on equipment? If, its the first, let the investor pump in money into this country to help strenthen the kwacha. If it is the second, let ZESCO cut down on those huge administrative costs which do not make sense and they will have enough left for investment. Failure to this, they just want to hide their inefficiencies by passing on the buck to the poor man. Let us rise up and condemn this move. Let Gov’t employee (top brass) start paying their own electricity and we shall see if their language will be the same.

  23. whats all tis nonsence wth rich people and gvt supporting tariff hikes.Alot of Zeds hav no access to electricity even at the prevailing tariffs.If ZESCO wats mo revenue let the extend there supply to even rural areas than milking to the bone a few number of Zeds who have power.Aftalo,since we export power let them increase the export power and leave the local market alone!

  24. ok cool. did you all know that zesco recently “realigned” their salary structures resulting in substantial increments in salaries for staff? A clear case of people lining their pockets in anticipation of the tariff hike?
    AND ERB, another institution of questionable value must be feeling impotent now that everyone who matters in government has comeout in full support of the tariff hikes. I think even the head of state is on record as saying tariffs need to reach “cost recovery” levels by 2011. well not quite since 2011 is election year but maybe 2010. Anyway i couldnt help but feel sorry for them when i saw them trying to save face and assert their non existent authority by saying they had censured Zesco. Anyway another day in the land of

  25. 21 Zambi-can: Clearly there are very few people who understand these issues but as usual Zambia is a country full of experts. Simple titbits my dear: solar panels do not have to be provided to you by ZESCO or anybody else. Those solar panels that you see on the rooftops of houses in Botswana are indivdual investments to reduce on the electricity bills. Wind energy is much more expensive than hydro electricity because it is still a developing technology. You find it mostly in rich countries (one or two projects in South Africa) where the governments can subsidise it to encourage its development. And it is not a versatile form of energy too like the one that you know. Ask and you shall be answered. Any further questions?

  26. The problem with electricity in Zambia is that for a long time we were fed with stories that hydro electricity was cheap. We never stopped to think that the investments required to produce it were collosal, or that the maintenace of this plant required equally colossal sums of money, or that the men and women who run these complex plants and institutions required specialised training and skills, or that one day what we had would run out. Worse still when the reality has dawned we bury our heads in sand and refuse to accept the facts, or we pretend to be experts on issues that we least understand. The tariff issue that we have been successfully postponing is now with us, looking us in the eye. Give real solutions not ignorant comments, guys, we have a problem on our hands.

  27. #36 Hydropower is cheapest source of electricity where the resource is available apart from high initial cost. Life span of a hydro is 50 years although it can last longer e.g Kariba Dam. It is cheaper because of low annual operation and maintenance cost i.e. no fuel cost. Ask Zesco how much it spends on fuel on the diesel generators. A private investor would not have sustained it. Governments fund these capital projects because of the colossal amounts involved. KK’s constructed most of the existing hydropower projects. What has changed? Although the MMD Govt has liberalized the electricity industry private investment has been nil. Waiting for a kill? Govt intervened in ZESCO’s rehabilitation projects despite WB objections. Bravo Bwana PS. Buck stops with GRZ not private…

  28. Zesco current and proposed average tariffs in kwacha per kWh (and USD@5,700:1):
    Residential: 170.27 (0.0298) to 306.39 (0.0537)
    Large Power: 108.27 (0.0190) to 192.43 (0.0337)
    Small Power: 124.39 (0.0218) to 193.04 (0.0338)
    Commercial: 212.40 (0.0373) to 323.11 (0.0567)
    Services: 151.75 (0.0266) to 223.21 (0.0392)

    Very few generation technologies are viable even at less than 6 US cents per kWh, especially when transmission and distribution costs are included. Higher tariffs seem inevitable unless the kwacha rebounds significantly.

  29. What I find alarming is for GRZ to say that we’ve to wait to find a private investor to invest in new power projects when our tariff becomes attractive. Energy supply is a govt responsibility. Is this what the WB is telling us. Were we not subjected to load shedding when Zesco failed to complete the rehabilitation projects in time because GRZ was not allowed to intervene? Nobody is saying the tariff cannot be increased but are the concerns raised by the WB and Cost of Service Study been addressed. How does the residential customer pay the same amount as a commercial customer. Is it because he is on the line rail and is irrelevant when it comes to elections? In any case the 6 cents applies to new projects. Most of the electricity will still come from the old power stations

  30. #37 I am glad that you understand the issue well. The point I was making about the beliefs that we have grown up with is that we thought hydro being a cheap form of energy meant it is free. Cheap is relative, the true cost of hydroelectricity may be UScent 7/unit but diesel for example may cost you up to UScent 50/unit. Yes you may consult Zesco on the cost of diesel electricity but people will probably believe it only when those who ran diesel generators during last year’s load shedding come to testify. So cheap hydro electricity in cost reflective terms means 7cents and not 3cents, but 7cents is still much cheaper than diesel power or any other form of energy. Regarding govt funding KK’s govt had cash and bank credibility, but remember our govt is HIPC after all the freebies in KK’s…

  31. #40; Yes most electricity will still come from old power stations but that’s only half the story. The point is that even the old stations need funding to repair and operate so we are not paying enough. Paying a higher price today for electricity also means that the current generation of you and me pays for the electricity needs of future generations. You have enjoyed the investments put up by KK’s generation and now it’s your turn and mine to pay for those generations that come after us, our children and grand children. This is how it works: because power plants are expensive and take years to build, one generation invests for the next generation. Our problem therefore is that the generation between KK’s and ours did not do the honourable thing but let’s not cry over spilt milk.

  32. #16: in KK’s closing days the price of bread was probably K150. After liberalisation the price is now K3,000 or thereabout. Are you telling us that the number of people eating bread has reduced since then? We can apply the same question to the price of petrol and pre- and post-KK. The point my friend is that society, ESPECIALLY OUR SOCIETY, has a lot of room to adjust and use resources more efficiently.

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