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.