The Energy Regulation Board (ERB) has approved Zambia Electricity Supply Company (ZESCO)’s request to increase electricity tariffs by 25.6% on average.
This follows ZESCO’s earlier application to ERB to authorise the increment of electricity tariff of up to 36% which the power utility company proposed. ERB Chairperson Sikota Wina announced the adjustments at a Press briefing in Lusaka.
Mr. Wina said the board arrived at its decision to approve the 25.6% increase after considering submissions from both the power utility company and the general public.
He explained that the new tariffs would take effect from August 1st, 2010 to 2011 and would be applied according to customer categories.
Once effected, residential customers would be paying K376.09 per kilo watt hour representing a 41% instead of the 69% tariff increase which ZESCO applied for while large power consumers would now be paying K320.54 per KW hour representing a 12% increase.

For the small power consumers, the tariffs have increased by 15% equal to K280.32 per KW hour instead of the 14% the utility company applied for. 27%increase has been slapped on commercial customers and 33% increase would be effected for the services tariff.
The Board Chairperson hoped that ZESCO would generate adequate resources to operate commercially and profitably after the 25.60% tariff increase.

Meanwhile, the board has recommended that Government should consider recapitalising the power utility company if it was to operate efficiently saying that it was under- capitalised.
The board has also observed that ZESCO’s receivables were still high and that Government should liquidate the debt it owes the power utility company.

Mr. Wina further added that ZESCO should accelerate the installation of pre-paid meters in all Government departments and urged the company to be proactive in debt collection.

He stated that it was imperative that the tariffs in the country were cost reflective to encourage more investment in the energy sector especially in light of the power deficit.

Meanwhile, ERB has converted the controversial staff tariff to pre-paid tariff following Zesco’s failure to abolish its staff tariffs which was a K500 annual charge.

The measure is to ensure that the burden of uneconomic tariffs is not borne by ordinary consumers. Zesco is expected to generate K3 billion from this measure.

“This means that if Zesco continues to charge the uneconomic staff tariff, the power utility company will forgo estimated revenue of K3 billion,” he said.
On some proposed projects, Mr Wina said the consumer projects which the firm intends to undertake this year should be postponed.

ERB has disallowed administrative costs such as donations amounting to K9.5 billion, entertainment costs of K436 million and K4.7 billion to Zesco United Football Club.

The board has ordered Zesco to consider implementing load shaving as an alternative to load shedding through the use of specific appliances such as ripple switches for geysers.
He urged Zesco to expedite the current electricity supply constraints and accelerate new power projects.

And speaking in a separate interview, ZESCO Managing Director Ernest Mupwaya said the power utility company was happy with the approved tariff adjustments. He noted that the increment would help the company cover operating costs and serve its customers more efficiently.

In a reaction to the increment, Zambia Consumer Association (ZACA) and Zambia Association of Manufacturers (ZAM) have expressed concern at the increase in electricity tariffs saying it will negatively impact on the commodity prices and economic development.

ZACA acting executive secretary Samuel Simutunda said that the electricity tariff increase will have an effect on the economy as the cost of goods and services are expected to increase.

Mr Simutunda said ZACA is not opposed to the increase but that the adjustment should be in tandem with the economic factors such as the inflation, recorded at seven percent.

“The 41 percent increase for residential is too much (exorbitant). Last month, the inflation was at seven percent, the increase is unjustified…We have been discussing and we have said that we are not opposing the adjustment but it should be in line with the other economic variables like inflation which is at single digit,” he said.

Mr Simutunda said electricity is becoming scarce and more consumers are falling off as they are not enjoying the service.

“Most consumers cannot afford the current tariffs and now the increase just means that the commodity is scarce,” he said.

And ZAM executive officer Roseta Mwape said in a separate interview that the increase will have a negative impact on the cost of production.
“We appreciate that the tariffs are lower than we anticipated but that does not mean that the cost of production will be reduced because we have other expenses,” she said.