There has been a public outcry over fuel and electricity hikes announced by ERB. The PF government is cognisant of the impact the price hikes will have on the consumer and the economy at large. The depth of challenges in the energy sector can not be overemphasized and should not be politicized.
In order to guarantee self-sustainability in the energy sector, the government has adopted a non-subsidy but the cost-reflective approach in running ZESCO and other parastatal entities. The reliance on subsidies has put pressure on Treasury and indirectly the economy as resources meant for socioeconomic development were being channeled to subsidize costs.
In order to have a cost-reflective electricity regimen, ZESCO needs to increase its tariff. This, in turn, will open up the sector’ to more investment and subsequently lower rates.
The tariff hike by ZESCO is meant to among other things cover operation and maintenance costs, taxes, improve generation and distribution and cover inflation pressure.
On the bright side, ZESCO has scrapped off it’s monthly fixed charges and reduced the 100-200kwh tariff from 0.89 to 0.85 kwacha for residential consumers.
The increase in fuel pump prices, has been necessitated by a weak kwacha at the time of importing the stock in October 2019. To mitigate the risk of loss, prices had to be adjusted upwards. The kwacha has been gaining against major foreign currencies and is expected to continue strengthening but the public must bear in mind the exchange rate which was obtained in October is key to the selling price of the stock obtained at that time.
Other factors affecting the price of fuel are the middlemen or transporters and oil marketing companies as well as the Tazama/Indeni facilities whose facilities are due for upgrades.
Going forward, the upgrading of Tazama oil pipeline to channel refined products such as diesel and petrol will result in reduced prices as the cost of transporting these products by road will be eliminated. Upgrading Indeni will also result in increased output and ability to process different types of crude oil even from neighboring countries such as Angola.
The government has also made it policy to have 30% of fuel on the market from clean and green sources. Biofuel from crops sub as hemp, cassava and sugarcane is being encouraged as a mitigate to the challenges.
Load shedding will soon be in the archives with the coming online of Kafue gorge lower hydropower station adding 750mw to the national grid beginning first quarter of 2020, Lusiwasi upper and lower with 15 and 85 megawatts respectively, Kabompo gorge CEC project with 40mw, GetFit solar project with 120mw, El Sawedi & Toyota Tsusho 100mw solar farms in western province, Universe 200mw solar project (135mw in Northern province and 65mw on the Copperbelt) as well as phase 2 with 300mw at Maamba power station.
Say what you like, but increased taxes whether direct or indirect are a clear sign of government inefficiency.
ZESCO should undergo a management overhaul. No matter how much you increase rates, as long as it is run by clueless cadres, you have solved nothing.
What would a diasporan knucklehead like you tell the engineers and managers keeping ZESCO running all this time??
@Zambian Citizen, are you the only !mbecile in Zambia who doesn’t know that ZESCO manager is a political appointee?
PF government are addicted to loans, that is all they know. And now to prevent the very predictable inability to pay back the loans, the increase prices of everything.
And your cv compared to Victor Mundende and his directors and managers??
@Zambiam Citizen, this is not about individuals, please get your ignorant head out of your arse. Think in terms of systems.
No matter how many individuals with whatever CV you place there, as long as their loyalty is to the appointing officer, they will keep dishing out whatever profits ZESCO makes to PF. ZESCO bankruptcy is inherent in the system, so change the system, place a manager there on merit, not a political appointee who dances to the appointers tune.
All countries, whether in Europe, Japan, America etc have their governments appoint boards in SOEs. How should we be different??? My point is you call these appointees cadres yet they are better managers and directors than you will ever be, they have impressive cvs which you can’t match!! Otherwise, prove you are better than them rather than hiding behind a screen in diaspora and insulting our leaders in ZESCO and GRZ who you can’t match!!!
If you read watchdog, mast and diggers and watch prime TV everyday, this country is so messed up only the tonga “messiah” can save it. But developments like those mentioned above are already on the ground-more reason we need to leave PF finish their agenda and remain in power beyond 2021.
what has put a strain on the treasury is not subsidies bwana. it is debt servicing. nkani izibika
If the tariffs are not still cost reflective,when will they?? As observed by @1 Lynch mob,AS LONG AS ZESCO REMAINS A RULING PARTY’s CASH COW,any tariff investments will amount to zero improvements as more party cadres get employed,bloating the laboir force,theft goes up through fictious procurements and outright theft!!CAN GRZ- ZESCO WORK ON COST REDUCTION INSTEAD OF ALWAYS LOOKING AT TARIFFS THAT SHOULD MEET THEIR UNNECESSARILY BLOATED COSTS!!
I have to agree with the ZESCO price hikes. If the money is truly going towards maintenance and investment in future projects, then I support it. A combination of solar and hydro will be the future of this country’s power needs. Once more we will be able to sell to our neighbours.
Unfortunately, the money from hikes isn’t going towards maintenance and investment in future projects but it is going to pay salaries and allowances to a ZESCO full of pf cadres.
Tell me something, why has ZESCO refused to offload those cadres and the only solution they have is to increase the tariffs?
Can someone tell us how much money is spent on Salaries , towards maintenance and investment in future projects ?
JOB VACANCIES at CRH Global.
The Employment office of CRH GROUP OF COMPANIES Al Ahmadi Kuwaiti and Manitoba Canada offices has approved the employment of qualified interested applicants into the following vacant positions available to enhance quality service delivery.
Qualified Medical Doctors , Service Technicians, Facility Maintenance, Mechanical
Engineers, Electrical Engineer, Heavy Duty Truck Drivers, Chefs, Project supervisors, Civil Engineers, Plant Start-up, Machine Operators, Construction and Installation experts ETC.
Interested Applicants are to submit their Educational Qualification Certificates
and Resume CV through this email address below for Consideration.
Email: [email protected]
Who is the author of this article LT? Why write an anonymous article? Much as it is desirable for ZESCO to have cost reflect tariffs,this has come with a simultaneous increase in fuel prices,low economic growth,high unemployment as well as rising general inflation. These are ingredients of Stagflation :A situation of economic stagnation (leading to high unemployment levels) and rising inflation (imagine the effect on the unemployed and those losing employment as result of economic slowdown).Can somebody apply some Chicago School of Economics principles to resuscitate this low economic growth.
ZESCO will do to decentralize power distribution by allowing other electricity generating companies supply power to the zambian market? it makes no sense that zesco has to buy from mamba or CEC in order to resupply that power. What Zesco can do is sell part of the power lines installed already by ZESCO in locations where these companies that generate electricity are so that those companies can assume the responsibility to supply power in those areas where they are as far as they can manage. in so doing Zesco can cut on costs and manage to supply what it can currently manage thereby freeing and realising some money for expansion programs. Zambia doesn’t just need one electricity grid to connect to, let there be many so that this charade of load-shedding never repeats itself again.
contd: what sense is there in buying power from Mamba at k10 per watt then sell that same power at k8 per watt to the nation? or buy at K10 then after this increment sell at k12 for already overburdened people instead of allowing mamba supply that power for k11 if they consider distribution costs and that will help people save k1 and enjoy good uninterrupted electricity supply. list ZESCO on LUSE as a Public company too, why still keep it as a parastatal, this will ensure ZESCO evolves and raise much needed capital. Since 1970 when Zesco was founded or established Government keeps this loss making, money sucking parastatal because it is their cash cow and cader dump yard.
What’s the point of increasing tariffs when all we get is Low Voltage or power surge messing up our equipment? You have a utility company running so inefficiently like ministry of Lands where you have to queue for 4 hours to pay a K50 in Ground Rent? You try to call the so called customer service line on weekends and it’ll constantly say line busy. Try to send SMS and your message remains in your phone. The bottom line is ZESCO is bankrupt! It needs restructuring. Throwing more money at it won’t improve anything! ZESCO needs unbundling and Competition!
In 2017 pf increased the tariffs 100 percent saying they wanted to migrate to cost reflective tariffs in order to attract investment. Has there been any investment? And when are we going to have the cost reflective tariffs in pf s’ reasoning? Don’t think zambians are so dull that you can hide in the cost reflective tariffs.
My advice to pf is that just increase fuel price and electricity tarrif to K500 or K1000 per litre and per unit respectively and get satisfied.
Looks like another article from Sunday Chanda but this time he wrote it anonymously because of the backlash from bloggers.
The intention may be good but the execution is very poor. You as a government have been signing this load shedding song for a very long time. We know there is politics involved here because first, you tested the waters by announcing your intentions for a nuclear power station. How do you honestly think you can run such a sensitive and dangerous operation when you are falling to run the only power utility in the country? Second, you want to announce the end of load-shedding closer to the elections for maximum publicity. Make load-shedding an illegal practice if we are to believe your seriousness in resolving this issue.