Zambia has the lowest electricity tariffs in the region and unless this is changed Zambia will not promote investment in the energy sector as long as Government does not hike the tariffs.
Economics Association of Zambia president Dr Chrispin Mphuka says at the moment e lectricity tariffs are not competitive.
Dr Mphuka said it was very difficult to attract investment in the energy sector due to low electricity tariffs which were not competitive with other African countries.
“Zambian power tariffs are very low in comparison to other countries and this discourages people to invest in the sector. The problem is that you have to sell power at a loss,” he said.
Zambia charges at $0.03–$0.04 per kWh electricity tariffs, Namibia charges $7,83/kWh , Malawi charges its electricity at K31.54 per KWh to K43.24 per KWh while Zimbabwe charges 9.86 US cents per kilowatt hour (c/kWh)
Dr Mphuka said it was unfortunate that small-scale enterprises were closing down their businesses due to load shedding.
“This clearly shows that load shedding is having a very serious impact on the economy,” he said
He said threatening to shut down Zesco would only scare away some interested companies who may be interested in investing in the sector.
Meanwhile, Dr Mphuka said currently there were only two ways to encourage private sector participation in the energy sector starting with the unbundling of ZESCO and government to subsidize ZESCO’s operations so that the company could become more productive.
He explained that unbundling of ZESCO was the best solution because it would create competitive tariffs structure among the created departments.
“There are two ways to move forward, if government wants more participation from the private sector, its either they subsidize ZESCO or unbundle it,” he said.
Dr Mphuka said investors would be assured of their full profits in their investment if the distribution and transmission departments were created so that they became more competitive.
But the Private Sector Development Association (PSDA) chairperson Yusuf Dodia said unbundling ZESCO would add more pressure to the economic burdens Zambia was facing because many departments would have to be created and that will require colossal sums of money.
Mr Dodia said unbundling of ZESCO would not be the answer to solving the problems the energy sector was currently facing because the procedure would require colossal sums of money for new management and buildings.
“I think the unbundling of ZESCO may not be the answer to solving the problems because what we are likely to create is three ZESCOs; one for generation, distribution and transmission and all of them will need new managements,” he said.w