The Private Sector Development Association (PSDA) has predicted that the proposed increase in electricity tariffs by ZESCO will have negative effects on the cost of production and consequently the cost of doing business in the country.
ZESCO has applied to the Energy Regulation Board to effect a 30 % tariff hike by July this year as a way of remaining cost effective and competitive in the region.
PSDA Chairperson Yusuf Dodia said this is because electricity is one of the key drivers in productive activities of various economic sectors in the country.
Mr. Dodia told ZANIS in an interview in Lusaka that this is why a slight change in electricity tariffs means a rise in the cost of various products which in turn affects the cost of doing business.
He noted that the proposed 30 percent electricity tariff increase will also make it difficult for the country to attract more private sector investments hence retarding national development. He explained that all investors be it in the manufacturing, mining or tourism sectors want to invest in a country whose cost of production is fair in order for them to make a profit.
Mr. Dodia stated that with high electricity tariffs, it all economic activities in the country will be affected and consequently disadvantage investors.
He said government should, therefore, always strive at ensuring that the cost of production in key economic sectors remains fair as a way of attracting more investments.
Mr. Dodia pointed that there is need for Zambia as a member of the Common Market for Eastern and Southern Africa (COMESA) to compete favorably with other countries in the region by balancing its trade through lowering the cost of production.
He, however, noted that with the just proposed tariff adjustment, the country may not be able to produce quality goods and export to other countries.
He further advised ZESCO to consider contracting loans to invest in infrastructure and improve its current supply and distribution of power if it is to be cost effective and attract investors in the energy sector.
[Q FM]
Zesco has inefficient managers supported by an inefficient government. PSDA might as well forget opposing the hike because it will still go through. In a country where managers think hikes are the only way to be profitable little sense can be made. Zesco buys huge fleets of vans almost every year. Within the first 12 months the vans look like they are 5 years old, already that tells you what level of inefficiency the company is running at.
Since Mr Sisala’s departure, Zesco board first appointed the company’s director of power rehabilitation project, Musonda Chibulu as managing director in an acting capacity before announcing the appointment of Dr Nyirenda who was later dropped by the board, then they had Cyprian Chitundu as Director in an acting capacity,in a space of 3 months after Sisala was shown the door,3 director have sat in that office,how do you expect an organization to be consistent with its operations,its just not possible
I suppose the govt is exerting a lot of pressure on ZESCO. The good move the govt should do is remain silent in the affairs of ZESCO by acquiring Preferential stock. Let businessmen have common stock and direct this industry to prosperity. With the booming economic activity in Southern Africa(World Cup and stadia infrastructure) one would have expected huge investments in power by ZESCO by having access to low risk finance on stock markets but this has not happened. We still have Konga and friends appointing and firing MDs. Such a pity. The hike is not necessary. Let Konga and his Board of Directors realign strategies and come back to people with good news.
#3, you are right! Why not list ZESCO on the Lusaka Stock Exchange and raise money from there?
Is the government afraid of losing a ready source of cash for their deals should ZESCO have other investors in it?
What ZESCO needs to do is streamline its operations by getting rid of unnecessary positions and functions, and by giving up the running of its football team.