FORMER Zesco Limited managing director Robinson Mwansa has advised the power utility to come up with a business proposal to enable the company access loans from commercial banks to recapitalise it.
In a written submission to the Energy Regulation Board (ERB) on the proposed 66 per cent electricity tariff increase by Zesco, Mr Mwansa said that the utility firm needed capital, which could only be accessed from commercial banks.
Mr Mwansa said there was no argument that the power utility was in dire need of capital injection.
He said that Zesco should not increase its capital base by subjecting citizens to the proposed tariff increase, as the cost of living in the nation was already high.
“With the difficulties all Zambians and organisations, including Zesco are facing, this is not the time to incite the citizenry to disturb peace and rise against their own Government,” he said.
He said Zesco had a large old stock of customer debt amounting to about K500 billion, which could be sold at a discount of 80 per cent.
Mr Mwansa said that this would mean that the customers paid 20 per cent while the remainder was written off.
He said by doing that, he was optimistic that within six months, Zesco would be able to raise K100 billion.[quote]
With the customers taking advantage of the debt write- off, an additional K100 billion could be raised and used to pay back commercial banks loans.
Mr Mwansa, a chartered electrical engineer, said it was common practice in business to reduce prices on old stocks to unblock the money which was locked up and raise funds.
“It is in the best interest of Zambian commercial banks because they know it and I know it that if Zesco sinks, the mines will sink, the Zambian economy will sink and inevitably we shall all sink together.
He said Zambian power consumers were dissatisfied with the performance of the national power utility.
Zesco could use the bailout capital accessed from banks to improve service to acceptable levels within nine months.
He said even if the ERB granted Zesco the requested increase, the cash flow would not increase much for the first nine months due to consumer blacklash.
Mr Mwansa said the value of any commodity went down when the price increased if there was no proportionate increase in the quality of the commodity.
“I am making submissions to ERB to reject the Zesco application and defer it to March 2010 to give Zesco chance to raise money from its resources and improve the service levels,” Mr Mwansa said.
He said that the proposed tariff increase would to some extent lead to citizens not be able to use power thereby dropping the standards of their lives or businesses.
“Those who are making this application may not have done any social, economic and political strategic environmental scanning and analysis on the impact of the increase.
“On the other hand, they did and are ignoring the results of the due diligence study,” he said.
Mr Mwansa said that in the medium term, Zesco could stop the wastage of the little money that it had if its workers rededicated themselves to improving the power supply using the available resources and raising the service levels to acceptable standards.
[Times of Zambia]