Energy Minister Mathew Nkhuwa has disclosed that state owned power utility ZESCO recorded K2.8 billion losses in the 2018 financial year.

In 2016, ZESCO posted a K137 million loss while in 2017, the losses jumped to K270 million.

Mr Nkhuwa said consequently, ZESCO has recorded an unsatisfactory rate of return on assets and has faced challenges to settle debts, owing to its weakened financial position.

The Energy Minister revealed this on Wednesday during a High Level Policy Dialogue Forum with Cooperating Partners in Lusaka.

Mr Nkhuwa observed that the high cost of power purchases from independent power producers and the cost of emergency power imports for 2015 – 2016 has been the major contributor to ZESCO’s liquidity challenges.

“This has also affected our ability to attract the significant amount of funding required for the sector’s diversification and successful completion of the significant number of electricity power projects already in pipeline,” Mr Nkhuwa said.

He said government is committed to creating a platform that will remove barriers and promote effectiveness in processes relating to investment in the sector in order to spur private sector participation in power generation.

“Undeniably, a number of private sector players have expressed interest to invest in electricity projects. However, given the market structure, these developers are looking to ZESCO Limited to underpin their development as the sole off-taker,” he said.

“Regrettably, the tariffs arising from the new power generation projects are significantly above ZESCO’s average selling price, resulting in losses on the utility’s part in the order of millions of United States Dollars per year, despite the fact that domestic tariffs were increased by 75% (from an average of USc 3.3/kWh to USc 6.18/kWh in 2017) and Mining tariffs increased to an average of USc9.3/kWh.”

Mr Nkhuwa said the increment factor is such that the overall increment in revenue collections was greatly affected by the depreciation of the Zambian Kwacha against the US Dollar.

“An increment in tariff from 3.3c/kWh to 6.18c/kWh meant that the revenue collections increased by a factor of 1.9. However, with the Kwacha depreciating against the dollar from trading at 9.68 in 2017 to 11.88c/kWh. The increase reduced to a factor of 1.5c/kWh in 2018 and then 1.3 in 2019 when the Kwacha further depreciated to 13.91.”

He charged that the reality is that ZESCO’s current average tariffs are still far-fetched below the cost of production from new Independent Power Producers (IPP) whose average tariffs are approximately US 11 cents per kilowatt hour.

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48 COMMENTS

  1. Nkhuwa hasn’t been fired yet? ZESCO board hasn’t been dissolved yet? Energy PS hasn’t been fired yet? Why do these people still have their jobs after running ZESCO to the ground. Is this the same team we are expecting to lead us out of this mess? Insanity is doing the same thing over and over again and expecting different results. Fun fact: Climate change is global not just in Zambia – so how come others do not have our problems?

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    • Zesco should only own electric poles and wires and distribution.
      Electricity power stations can be owned by some other companies. There is a problem of understanding here. Let me help you: if Zambia want to win games, and overcome the loadshedding and the 7-1 losses in a week, then
      Zesco United team should contribute midfielders and strikers.
      Power Dynamos (Copperbelt energy) and Mwamba Coallies should provide goalkeeper and defenders.
      Coach: Minister Nkuwa.
      Do you get it?

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    • there is a lot mismanagement at ZESCO because of too much politics. Its not even about the water levels. right now the good lord has opened the heaven’s spill way gates but ZESCO has no plan on how it will handle the abundant rainfall. already when it only showers and a bit of a ka lightening ninshi wala , power goes.i tell you Kariba dam will filled to the beam but come next year, you will hear ati the same kariba dam can longer contain the waters and boom,they will open the spill way gates and you will be back to square one. This is Zambia for you!

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    • And there is a grown man standing in Parliament and at State House ignorantly reading a speech that ZESCO’s problems are due to climate change. How can someone wake up in the morning and proudly say he is the President of a country.

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    • The problem is the bloated payroll on account of all the pf cadres hired…plus money from Zesco was used by this corrupt pf Govt for campaign purposes…things will only get worse with these thugs at the helm.

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    • @1.3, I also have a contribution! If Zambia has to win 7-1 and overcome the load shedding blues, UPND must contribute HH to the National Team so that he is a striker and skipper. HaGAY JAY must be the goalkeeper, Nose Demon and BoSPAKATA as strikers. Zambia HAZAWINNER HAGAIN.

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    • Just see how these thieves have ravaged our country. Selfishness by our politicians. Victor Mundende knows too well the syndicate going on in ZESCO for people to amass personal wealth.

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  2. “….He charged that the reality is that ZESCO’s current average tariffs are still far-fetched below the cost of production from new Independent Power Producers (IPP) …..”

    This is lies……we are only having IPPs now. From 2011 to 2017 there were hardly any IPPs and rain was free to fill up kariba. Unless PF were charging ZESCO for rains…..

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    • Do you research properly and you will realize that we have had independent power produces even before 2011, eg Lunsenfwa Hydro power station in Kabwe rural…

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    • Ward Seven, a Harare Residents’ Association has raised the flag over load shedding alleging that there are senior government officials whose houses are directly connected to power lines hence are not affected by load shedding.
      The association said the current energy crisis needs urgent attention arguing that viable solutions to the current crisis should be immediately implemented considering that local power generation and imports continue to shrink.
      Below we paraphrase the possible solutions the Association’s suggested.
      Ward Seven notes the need to remove taxes and duties on inverters and batteries which make up about 80 % of any solar system. This comes after the government recently announced that it will be incentivising solar systems.
      The obvious, we should have built Hwange 7 and…

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    • Continue
      The obvious, we should have built Hwange 7 and 8 ten years ago!
      We should have eliminated corruption thirty years ago. And several things, ‘in the past’.
      Raise electricity tariffs already, invest the money in fixing things, openly and transparently.
      Solar geysers should be duty-free and tax-free. And non-solar geysers should be taxed to make them prohibitively expensive.
      Load shedding needs to be open and transparent considering that some are whispering that some ministers have direct lines to their houses whilst some clinics have no power.
      Energy minister, Fortune Chasi, has to publicise the list of debtors, even at is own peril. The public knows who owes ZESA but wants the authorities to confirm in the affirmative.

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    • These criminals have destroyed this country loadshedding now 20 hours, how do run a productive modern economy like this. Just resign.

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  3. We’re tired of zesco ever transferring its production problems to us customers due to their poor planning and over employment.

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    • You forgot to add political interference, corruption where deals are single sourced without even a project commencing its just written off, I doubt ZESCO has a say on its finances. And the President can not do anything as his party feeds off it, I know cadres who do nothing but PF work yet are on ZESCO payroll and drive ZESCO vehicles.

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  4. There are just too many mixed stories from the mouth of this incompetent minister. When lies are too many, u will one day become dumb, just wait.

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  5. Just sale this company to the chinese or europeans..we have failed to run it due to interference from successive governments. So just get rid of this cursed organisation and let the roosters come home to roost

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  6. ZESCO has PF cadres on its payroll.
    ZESCO directly funds the PF party.
    How can such a business entity be profit making?
    The viability of ZESCO and the Zambian energy sector is tied to the PF’s stay in power.
    As long as the PF stay in power, ZESCO will continue to be loss making , electricity tariffs will be high and the energy sector will continue to decline.
    The solution to this problem is there in 2021.

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  7. When you look at a glance the AFRICAN regional power pools which African utilities are profitable and the reason why? from West Africa Power Pool countries (Benin, Burkina Faso, Côte
    d’Ivoire, Gambia, Ghana,Guinea, Guinea Bissau,Liberia, Mali, Niger,Nigeria, Senegal, SierraLeone, Togo.
    Southern African Power Pool Countries like Angola, Botswana, DRC,Lesotho, Malawi,Mozambique,Namibia,South Africa, Swaziland,Tanzania, Zambia,Zimbabwe.
    Central African Power Countries likeAngola, Burundi,Cameroon, CAR, Chad,Congo, DRC, Equatorial
    Guinea, Gabon, Rwanda.East African Power Pool countries like Burundi, Djibouti, DRC,
    Egypt, Eritrea, Ethiopia,Kenya, Rwanda, Somalia,Sudan, Tanzania, Uganda.including those North African PowerPool countries like Algeria, Egypt,…

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  8. Libya,They have “Profits”business models that really based on tariffs increments to chase against “cost reflective Tariffs that have often failed to transform these utilities into profitable businesses Most of them will need new strategies and focus on FINANCIAL TRANSFORMATION and use tariffs as a last resort to sustainably They will need to grow their business segments and prioritize security of supply with affordability and sustainability As it it now Our ultility Zesco still has some potential to grow its profits and must not all be drawn in the drain by main costly IPPs because that is a source of some of those losses

    There only 2 long-term sustainable utilities in Africa and if…

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  9. and if Zesco will have to emerge and support the countries economics must transform its Finances and business strategies way from tariffs increments that have failed yield profits after successive increments in Nigeria

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  10. What a week this has been. Negative indicators all over and another bye election in the offing…. entering 2020 on our knees for certain

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  11. Amidst all the revenue problems at ZESCO obviously as a result of reduced sales (simple maths, if a household used to buy 300units/month now 100units can last a month!), ZESCO has not implemented any structural changes to its employee structure to ensure efficiency! The wage bill is ever increasing without corresponding revenue, how can a company make a profit?? In the private sector you cant even call that a company!
    Passing your problems to the public in increasing tarrifs is not the answer, bring on board real business administrators to run this company and take those political hands off ZESCO!!

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    • This report is for 2018…2019 Report will be worse than this as ZESCO can not pay its suppliers even $1 million .

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  12. Let Mr Nkuwa compare our tarrffs
    With our neighbours. How much in
    Zimbabwe,Botswana,Namibia,congoMozambique,etc and come up with
    An average tarriff.What problems we
    Are facing is the same.

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  13. what he has said is that in 2017 they increased tarriffs by 75%. Since the imported power is paid for in USD and we pay tarriffs in kwacha and the kwacha has since 2017 depreciated by almost 50% from 9.68/$ to 14.0/$ hence making the 2017 increment only at most 30%. Therefore to compensate for the kwacha loss they need to increase tarrifs again as if they didnt increase. The kwacha performance has washed away the 2017 tarrif increment! so even if we increase today by 100% if kwacha continues falling ZESCO will come back and tell us we are not paying enough! So the solution is sort out whoever is messing the kwacha and also deal with the operating expenses of ZESCO and allow new alternative sources of power…

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  14. And we must also look at the management at Zesco. Surely we in a serious problem with power and apparently the MD has been on leave. Who even approve such nonsense??

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  15. Surely how do you explain your loses jumping 10 fold in one financial year. We are not talking stocks that can plummet in minutes. We are talking a primitively run entity with the same it has been since time in memorial.
    I can only see poor management and diversions.

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  16. Fire these incompetents and close this non performing dog mess called ZESCO parastatals do not work and they never will.

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  17. but then: Good explanation. My but then is ‘How long did you think the strength of the rebased Kwacha would last?’ I am surprised it has lasted this long, mostly because Zambia does not have much international trade except in mineral resources. Once a currency has depreciated, it is really difficult to regain its strength. Let us hope Zambia will be the first country to work that miracle.

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  18. This ZESCO has sabotaged our businesses and the Economy as a whole with GDP down by 50% from 4 to 2 and still shrinking as projected by BOZ! If this is the caliber of products our universities are producing who can’t put a country’s interests first, then we better empty all our prisons and lock these chaps together with their teachers for failing this great country!

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  19. Zesco is not operating independently. All PF kaponyas have been offloaded there most without any single job description but there are there doing nothing significant to add value to Zesco running. Whenever there are by-elections cadres go there to ask for campaign money. Dont ask how we . know all this we have information! So why cant a company run losses – its just in order that Zesco is in trouble. The only reason that its breathing is because it has huge assets but very soon and not even later it will be on its knees. Next year’s campaigns will see Zesco being milked like a dead cow.
    Disaster!!!!

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  20. If you calculate the huge allowances that Zesco Directors, board members, erb board members, useless PF cadres that are paid by Zesco like sunday chanda & Antonio’s mwanza as well all the funding that Davies mwila gets to fly around the country bribing opposition members in a private jet, all the funding that opposition members councillors GBM were given together with funding for all PF activities including funding for by elections etc etc then you will find the total will come to exactly K2.8 billion.

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  21. Former ZESCO board members installed by PF

    Fatherless bwalya…..Charlie sex ….among other caders

    Can you expect a power company to work like that ??

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  22. lets replace the MD and Finance Director Mr NKhuwa there at Zesco and Realign the Director Strategy in that position appoint a transformational oriented man to ensure strategic focus for Zesco as it is the loss has not been taken with a Financial and strategic sense it deserves We are not going anywhere with them as employees and Zesco

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  23. Ba ZESCO, as you do your load shedding, please remember that Economic productivity does not suffer further! Give us power during productive hours of the day as opposed to the 4 hours after midnight! You started well when you could give us power either in the morning or afternoon. At least then we could plan. It’s pointless giving us power kumacha! Of what benefit is that power to our shrinking economy growing to GDP of less than 2? One gets the impression like you don’t want us to use your power anymore. Please review your load shedding schedules to help sustain our economy! Don’t just copy the Zim way of load shedding blindly! It’s not good for the economy!

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  24. Ba ZESCO, as you do your load shedding, please remember that Economic productivity does not suffer further! Give us power during productive hours of the day as opposed to the 4 hours after midnight! You started well when you could give us power either in the morning or afternoon. At least then we could plan. It’s pointless giving us power at awkward hours! Of what benefit is that power to our shrinking economy growing to GDP of less than 2? One gets the impression like you don’t want us to use your power anymore. Please review your load shedding schedules to help sustain our economy! Don’t just copy the Zim way of load shedding blindly! It’s not good for the economy!

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  25. as soon as zesco introduced prepayment system, i knew something was about to happen. dont argue yet, most of us adjusted usage while zesco continued connecting new clients in the lower bracket. do i need a calculator to ecplain this? yes.

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  26. agony is getting a euro bond of 3 billion us$ to finance a company among others that will make a loss of 3 billion dollars in ten years. is that not equivalent to getting another loan without paying back the first one.

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