ZESCO board chairman Vickson Ncube says implementation of cost reflective tariffs for electricity will be an academic exercise which defeats the main objective of the government if it starts to impact on the ability for industries to work efficiently, create jobs, pay taxes and meet government’s objectives.
During a plenary session at the 10th Zambia Mining and Energy International Conference (ZIMEC) in Kitwe last week, Ncube said there is need to strike a delicate balance between achieving economic tariffs for power in the country and ensuring electricity supports economic growth and the drive to increase number of Zambians with access to electricity.
He said the cost-reflective tariffs should be balanced with the need for ordinary Zambians to access power and economic growth.
The Energy Regulation Board is undertaking countrywide consultations with key stakeholders and the general public following the issuance of the government green paper on the findings and recommendations of the 2021 Electricity Cost of Service Study.
The study which focuses on establishing an electricity tariff that reflects final cost on the consumers, encompassing all costs from generation, transmission to distribution, was undertaken by United Kingdom-based Energy Market and Regulatory Consultants (EMRC).
Ncube observed that an accelerated migration to cost-reflective tariffs could result in an increase in deforestation for a country that is already experiencing an upsurge in the number of indigenous trees being cut for charcoal production.
“If I were to increase the cost of consuming electricity in Zambia today, people will limit what they use that power for and use partly the charcoal, and then we are defeating the whole push for green energy and also efforts to protect the environment,” he said.
Ncube said the country needs to have a “holistic approach” when deciding the direction of the cost of selling electricity to consumers.
“We want to heat up this economy so that it drives more jobs, but should the cost reflective tariffs start to impact on the ability for industries to work efficiently and create jobs and pay taxes and meet government’s objectives then that cost reflective tariff becomes an academic exercise which defeats the main objective of the government,” he said, according to a statement from Zesco corporate affairs.
He called for an integrated approach where the government was moving from end to the beginning, and beginning to the end until it reached a point of equilibrium.
“Where we become efficient for the whole economy and not just the energy sector,”he said.
Ncube said the new dawn government’s focus was to make electricity a catalyst for economic growth.
“We must understand that investments are not only to be attracted in the energy sector; it must be attracted throughout the chain. More mines should come, but if they are going to find that the cost of energy is an inhibitor to opening a mine, they won’t come,”
he said. “In the 8th National Development Plan, energy has been classified as an enabler and not an end itself. We must run Zesco efficiently. At the same time let us be careful not to have a situation where because we want to attract so much investment in the energy sector, we kill the rest of the industries in Zambia.”
He said the country should take a futuristic approach to the migration towards cost-reflective economic tariffs.
“I am not going to say a cost-reflective tariff means we must absorb that cost of the power station from the existing customers alone. It must be a projection to say in the next so many years there is that capital cost that forms the base that should not be included in our cost-reflective but rather you grow your customer base to reduce the ultimate cost,” said Ncube.