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Wednesday, July 8, 2020

ZESCO & load shedding -Just sell that damn thing

Economy ZESCO & load shedding -Just sell that damn thing

File:Flood gates on the Kariba Dam wall between Zimbabwe and Zambia open ceremonially on February 20, 2015 after the two neighbors signed $294 million in deals with international investors – JEKESAI NJIKIZANA/AFP/Getty Images

A short drive from woodlands shopping mall towards Chalala stands a 40-foot container, burgundy in colour – located just before the ring road intersecting Chilenje and Chalala.

It is owed by Rasta – a middle aged artisan of slight built with a distinct husky voice. His free hanging dreadlocks aptly compliment this moniker. More than his persona, it’s the quality of his products and impeccable welding skills that has made him the go to guy for steel fabrication and related products in this vicinity – a factor that is ably demonstrated by the snaking queue of clients standing outside. Despite there being only few people, the commotion is palpable.

The reason: His clients are jostling for a quick turn for service granted that the load shedding schedule allocated to that area by power utility, Zesco is nearing kick-in. Once switched off, his clients would have to wait another 6 hours before power is restored. By then, the business would have lost a considerable amount of revenue if not all his takings for the day. Why not buy a generator to counter intermittent disruptions? “Nanga mu uziba mutengo wa genset. Elo nayeve genset isebenza na mafuta”, loosely translated as, do you know the price of a genset and associated running costs,” he retorts almost in agitation.

Rasta has 3 welders in his employee with an admin clerk raising the tally to 4. It’s certain that a poor profit yield for the month will impact the pay-cheque of these employees. In the face of this latest bout of outages, he barely has options to keep his head above waters. Like other mere mortals, he has probably resigned himself to fate opting to wait for the storm to pass.
Load shedding is a menace more so to households saddled with a double whammy of rising food prices and transport costs. Adding to this, the perceived inertia by ZESCO towards mitigating this scourge has only fueled angst to an already febrile situation. Ever wondered then what the impact is to small businesses such as Rasta’s and by extension to GDP growth? How many jobs will the economy have shed before a stable and consistent supply is restored?

As is often the case with most developing countries, Zambia’s small business sector is the life blood of its economy. A 2017 research conducted by Bank of Zambia (BoZ) and the International Labour Organisation (ILO) further illustrates this argument. It showed that Small Medium Enterprises (SMEs) accounted for 70% of Zambia’s Gross Domestic Product (GDP) contributing about 88% of the country’s employment tally. By implication, this segment of the economy should be the key driver to achieving the state’s medium to long-term job creation targets. Granted energy is a key input cost to production in the SME environment, it’s likely that load shedding is strangling growth.

In fairness, it would be disingenuous to entirely blame the state for ZESCO’s woes for most of these challenges pre-date the government of the day. To be more circumspect, Zambia’s energy is largely derived from its hydro-power stations so the only fact that should matter in this context is that we had poor rains.

Yet critics argue that this is not the first time the country is facing a challenge of this magnitude and therefore, the power utility needed to have planned for a possible recurrence – given the unpredictable and inconsistent rainfall patterns we have come to experience off late. In 2016, Zambia had 2 338 Megawatts (MW) of installed hydropower capacity with a forecast report predicting demand to peak at a rate of 3% per annum.

Mega mining projects aside, the country has in the last 3 years – experienced a massive infrastructure boom manifested in shopping malls and housing developments mushrooming across the country. At best, the stats are indicative of a growth that is fast outstripping demand. As part of its scenario planning, doesn’t ZESCO have early warning capabilities to detect a potential crisis in the event of say a drought or any unplanned catastrophe? Most important, does it have the capacity to mitigate outages?
On scrutiny, the prognosis looks dire. Gleaning through the company’s 2017 financial results available online is a painful experience – akin to a dentist attempting to remove your set of pre-molars using a swiss army knife. ZESCO’s liabilities far outweigh its bottom line. Just how much it owes institutional lenders is hard to decipher from this well-crafted document – perhaps a product of clever accounting.

Even more troubling, this is an entity that’s consistently used state backed guarantees to borrow heavily yet lacks the capex to fund new power generation plants. During this period when it should be embarking on a drive to bring on board critical skills that can help to stem blackouts, it has instead placed a moratorium on recruitment. Any assertion therefore that it is battling a severe liquidity crisis couldn’t be further from the truth. While likely that management will pull all stops to disprove the vibrating chorus of gloom, the fragility of the company’s fiscus is evident in both the unabating outages and the lackadaisical approach to addressing this challenge.

So, where did all the money borrowed from multilateral institutional lenders under the guise of, capacity building, infrastructure revamp and related activities go to? Make of this what you can. It’s even more baffling that the relevant Parliamentary oversight committee responsible for monitoring ZESCO’s sustainability, hasn’t yet red-flagged its precarious balance sheet. In the absence of plan B, shouldn’t the company be considering changing both its business and operating model?

Its unsustainable for ZESCO to continue to play and officiate its own game. Its infrastructure – especially its grid, is desolate from years of neglect implying it can barely carry excess capacity from new energy producers set to come on board. The firm should either choose to focus on energy generation as its core business or carve out the rest of its distribution infrastructure to nimbler players that have capacity to manage and upgrade these assets.

If the latter proves unworkable, the state should consider giving up partial custody of this dinosaur through a public listing on the Lusaka Stock Exchange. Food for thought? Given our experience, privatisation remains an anathema to our parlance but what could be worse than government keeping a cash guzzling asset that is holding the country hostage? Just sell that damn thing.

By Chimwemwe Mwanza

[Read 4,049 times, 1 reads today]


  1. ZESCO is a PF cash cow.
    It can not be privatised.

    Seeing the monopoly ZESCO has had over power supply, this thing should be exala an pa in the region , drought or no drought. But because it is a PF cash cow and a place to park PF caders into employment , it is a morbid mammoth.

    • ZESCO is mismanaged and there is heavy political interference especially from this PF govt that doesn’t even hide it …just a few months ago Lazy Lungu was in Petuake commissioning a Technical School named after himself and constructed or assembled by ZESCO construction and funds donated by a Chinese Transformer Manufacturer already you can see the corruption here.

    • Chimwemwe Mwanza please when writing articles you should learn how to build up a story to get people’s attention, those paragraphs about Rasta should have been summarized into one because by the time you get to ZESCO issue the reader has lost interest as you are shooting all over the place with that misleading headline.

    • Ba LT respectable journalism doesn’t allow four letter words in your reports especially in your headline! What is ‘damn’ doing in your headline?

    • Nay Jay Jay. Thou are not literal. Chimwemwe s intro is interesting for it evokes my interest in the topic. The headline I don’t like but his description of rasta is great and serves to goad one on to what is now a boring topic namely Zesco’s loadshedding

    • There is no juicy subcontract packages in Solar farms…Western Province and Northern Zambia would have been supplied by them as the demand is not high but our corrupt politicians want to waste $2billion constructing another dam dependent on the same water Kariba is on…talk about pputting eggs in one basket.

    • Remember Prof Clive Chirwa Anti-Development Group statement on Zambia Railways, he summed it all.
      The anti-development group for the railway in Zambia is not composed of illiterate people.
      This group has many facets from political garbage hiding behind persona incognito to some truck owners who have heavily invested in the lorries with borrowed money.
      The change in a working railway is perceived as a threat to their businesses and they would rather curtail national development for selfish ends in copper haulage business.
      The other facet is composed of government officials who travel abroad a lot in pretence to attending exhibitions and general meetings.
      As soon as they get to the airport on their return, they dump in the bin the collected brochures from the exhibitions to provide…

    • Continued
      … exhibitions and general meetings.
      As soon as they get to the airport on their return, they dump in the bin the collected brochures from the exhibitions to provide space for one more pair of cheap shoes for someone who is not part of their family.
      The anti-development group is only interested in chaos because that is when they thrive. The losers are the people of Zambia who want to see real development not numerous shopping malls that sales unaffordable products to them.

  2. And you think the foreign private investors will worry about Rasta’s disruption of business due to load shedding? They will just export the power to SA or Botswana
    Wake up Zambians from docility. Look at what happened to Railway Systems of Zambia after privatisation. There is no free lunch. China is here for China and Chinese. Turkey is here for Turkey and the Turkish, Lebanon is here for Lebanon and Lebanese. Stand up for what belongs to you. There will only be misery, exploitation and regret in giving ZESCO for a song to foreigners.

  3. Economists say “there is no free lunch”.This is very true!!Hence,selling ZESCO to foreigners should be the last option!!However,it is damn hell about what ZESCO is doing now.Critical company planners always think 20 years ahead.Climate change is real and it is here to stay.Thus,ZESCO should not continue depending on RAIN WATER for power generation.Plan B has to be found and urgently so!!!If ZESCO want to continue depending on WATER,then in a short-term,they have to dig channel from lakes such as Bangweulu,Mweru,Kariba to take water into Zambezi river so that Kariba dam is ever full.There is too much water in Zambian lakes!!If not,then take a solar route!!ZESCO CAN ACHIEVE THIS AND ALL THEY NEED IS JUST GOOD PLANNING!!The current load shedding really sucks to say the least!!!

    • Spot on @Njimbu. And what this damn Zesco is doing now is that they are load shedding some areas twice in 24hrs and call it ’emergency loading’. Please Zesco can you stick to the load shedding timetable you are a big inconvenience.The way the President hurried the completion of the Maamba coal energy generation project I thought it was a long lasting solution to loadshedding.Awe mwee pa Zambia pena ma rubbish yekayeka

    • @ Njimbu when Economists say “There ain’t no such thing as a free lunch” The acronyms TANSTAAFL”. This implies that resources are scarce and the value is not free par say. Simply put if you offer me lunch and i eat the food, its not a free lunch par say someone else is paying for it either you directly or indirectly but its being paid for, hence its never free in reality. Paw

  4. @3 bashi chite,AGREED,the problems at ZESCO are just a symptom of our collective failure to value and manage what belongs to us as a Nation. ALL WE NEED ARE STRONG GOVERNANCE STRUCURES TO PROTECT OUR STATE ENTERPRISES,PUBLIC INSTITUTIONS AND INDEED OUR FINANCIAL RESOURCES. I remember as students during the early years MMD we opposed privitization of Zamtel and Zesco after seeing the misery that privitization had created. WE CAN JUST CHANGE THE OPERATING MODEL BCOZ IF WE PRIVATIZE ZESCO,THAT WILL BE THE END OF RURAL ELECTRIFICATION,EVEN THE SMEs THE AUTHOR IS TALKING ABOUT WILL DISAPPEARS.Just look at what has happened to the once vibrant Copperbelt after privatisation!!

  5. Do you see why Germans insult you?
    As long as those running ZESCO have hands like Termites, forget it! Zambia is headed for serious darkness! If Loadshedding is this intense during winter months, think of what will happen in the hotter months of October / November?
    Too bad on those who are still depending on ZESCO for their power needs. It’s so liberating to be off ZESCO and Lusaka Water!

  6. Increase quantum of electric power first. To do that, you need diversify plan. Focus on alternative to hydro power. The alternative includes power mix of solar power, nuclear power, wind power, thermal power. Invite with modest tonality foreign direct invest (FDI). It is unlikely that ZESCO technocrats are operating without political interference. Here, pin point the center of political interference and then eliminate it ounce and for all. At least reduce it to the barest minimum. Politicians are enablers, not producers. They need to follow developments at arm’s length.

    • You seriously think PF is capable of reflective assessment …do you not understand that most members of PF’s MCC are board members on the govt companies, they are board members but have a salary, company vehicle and allowances…you seriously think these people can sit down reduce political interference?

  7. Once you privatise Zesco, that Rasta you are crying for will be out of business completely because the owners of Zesco will be in it for profit, to make money for their countries and Rasta wont be able to afford the cost of the commodity or non will be available for him if they decide to sell elsewhere.
    Instead of looking for a quick fix, why not try and manage Zesco efficiently like a business that it should be? Are we saying there are no Zambian CEOs that can turn around this company? Forget about the cheaper tariffs Zesco claims it gives household customers below market value, the entire company structure needs restructuring from over staffing to shoddy procurement procedures etc…

  8. Chimwemwe Mwanza you like Fredrick Titus Chiluba are a moroon and evil. Sell a vital national assert, you must be kidding me. This is what happens when people have an inferiority complex. If you do not like Zambia move to Turkey or Saudi Arabia; see if they are paradises. Even in bad times, always keep vital national asserts in a nations hands. You want to repeat what Chiluba, Francis Kaunda and HH did to a glorious nation in a space of 6 years? Stop spouting nonsense and stick to journalism.

  9. Zesco degenerated as a company from the mmd era to pf. During mmd the load shedding time was 2 hours in the evening from 17.00 hrs to 19.00hrs peak time when stoves are run for cooking. I remember sata than in opposition having a rally in chawama and zesco switched off power. He said during the rally that the mmd government were switching off power deliberately to disrupt his rally and our people are suffering. Once elected he will ensure that load shedding will be a thing of the past. 2011 pf came to power and by 2012/13 the country was facing unprecedent load shedding never seen before for 8 hours per day, everyday and the whole country. No body was spared. This was the beginning of the end of smes and the economy was killed just here. Starting from small companies to large companies…

  10. Numbers numbers numbers. Give us a picture of how ZESCO has performed in the past 20 years not just these Rasta stories.

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