Tag: Electricity tariffs

Increase of ZESCO electricity tariffs and prices of petroleum products

Increase of ZESCO electricity tariffs and prices of petroleum products

Press Statement for immediate release.

As it was expected, President Edgar Lungu’s government provided Zambians a toxic and painful New-year present: An increase in fuel prices by 10% as well as in electricity tariffs by 22% and 49% for domestic and commercial consumers respectively.

We foresaw it, we previously alluded to it, but much more significantly, we had warned against such a decision! Apparently, our well-meant advice continues to fall on deaf ears. As a result, the PF government is dragging Zambia into a calamity where public debt, currency depreciation, a failed food production system and energy crisis are combining to destroy millions of livelihoods. In the midst of all this, sheer incompetency and deep-rooted corruption make solutions seem impossible.

The drastic increases in electricity tariffs are supposed to help ZESCO operate efficiently and viably! The fact however remains that ZESCO is a political cashcow. The Petty-bourgeois political leadership of this country has continued to abuse this institution for decades. The privatisation of many other parastatals under the MMD government in the 1990s left ZESCO as a lone cash-cower. With elections coming in 2021, no serious transformation will be undertaken to change the status quo.

The Socialist Party also notes that the mining sector that consumes the biggest share of electricity, 50.9%, will continue paying the low tariffs it has continued to enjoy for years! It has been exempted from this tariff increase. It is impossible to tackle ZESCO’s economic woes, without addressing the pervasive arrangement and faulty logic underlying bulk purchasing.

The 49% commercial tariff increase will hurt business activities. This is especially the case for small-scale businesses that were on the verge of collapse due to erratic power supply. However, the commercial sector consumes only about 14% of the generated power but has, since 2015, continued to increase its installed self-generation capacity. It is the biggest buyer of voltage regulators, capacitors, power surge factor units, generators and off-grid solar plants. It has found ways of insulating itself from total collapse. It will also ultimately pass on the extra cost to the final consumer – adding to the inflationary pressures of the Zambian masses.

The domestic consumer of electricity is the biggest loser and victim of the tariff increase. A 200% increase is massive and immoral given all other economic constraints the Zambian masses are facing. It is apparent that President Edgar Lungu is choosing to protect the profit interests of the mines above the welfare and livelihoods of the Zambian masses.

If the aim of this decision is to send a signal message to the IMF and other donors that have insisted on economic viable tariffs, then it is far from achieving that objective – without drastic organisational changes to ZESCO and the faulty arrangements with the mines. If it is about attracting more foreign direct investment in the energy sector, then it is equally naïve. There is more to the creation of the requisite economic and legal environment than lopsided tarrif adjustments – the operators of Maamba Collieries can offer generous advice based on their experiences. It’s a shameful lesson in incompetency and arrogance of our policy makers.

The Socialist Party therefore demands the following:

1. An immediate withdrawal of the electricity tariff increase.
2. Dissolution of the ERB Board.
3. Postponement of tariff adjustments pending the completion of the proposed “cost of service study” that would help ascertain the real cost of producing power and the determination of appropriate tariffs.
4. Inclusion of the Mining sector in tariff adjustments.

Issued by:
Dr Cosmas Musumali on behalf of the Central Committee of the Socialist Party.