THE Energy Regulation Board (ERB) has with immediate effect increased electricity tariffs by up to 200 percent to make them cost reflective in the wake of severe power deficit that has hit the country.
ERB has adjusted the structure of electricity tariffs for residential consumers to 300 kilowatts from 100, an all-time high increase in as many years with the hope of attracting investment in the energy sector.
With the tariff increase, residential consumers would now have to pay K1.13 from K0.37 per kilowatt, representing an increase of more than 200 percent in tariff charges while commercial consumers would have to pay K154.47 from K55.09.
Social services such as schools, hospitals,
orphanages, churches, water pumping and street-lighting would have to adjust their tariff payment to K139.41 from K47.91.
In a statement released to the Daily Nation yesterday, ERB announced that electricity tariff adjustments were expected to generate revenue that would facilitate an investment of up to US$3.7 billion in power generation projects.
According to the statement, the 200 percent increase in electricity tariffs would stimulate investment in power generation projects which would see the country’s national grid have an additional 1,500 megawatts.
The statement said following Zesco’s application to ERB to increase electricity tariffs in the wake of the challenging economic environment worsened by drastic reduction in the hydropower generation in the country, ERB had approved a 300 kilowatts increase for residential consumers while commercial consumers would have to consume up to 15 KVA.
ERB said the increase in the electricity tariffs had also been necessitated by low tariffs the country has had in the face of power deficit while the country had been importing emergency power at a much higher tariffs than it was selling to consumers.
“Zesco has made an application for electricity tariffs adjustment in the face of challenging economic environment. The situation has been worsened by drastic reduction in hydropower generation capacity as a result of low water levels. This has caused a severe energy deficit necessitating the importation of emergency power at a huge cost to Government. This is so because Zesco by itself cannot afford to meet high cost of imported emergency power on account of low electricity tariffs,” the statement said.
The statement explained that energy supply costs and revenue were affected by changes in macroeconomic factors such as inflation, exchange rates, interest rates and the operating environment.
It said the country had marked deterioration in the economic fundamentals which had resulted into escalating operational costs for the power utility company.
It stated that Zambia had the lowest electricity tariffs as compared to other countries in Africa such as Ghana, Kenya, Mozambique, South Africa, Tanzania, Zimbabwe, Malawi, Uganda and Lesotho.
ERB has also reduced the Zesco subsidized electricity units to Zesco staff to 300 kilowatts from the current 2000 kilowatts in the spirit of all citizens sacrificing in the face of severe electricity deficit.
ERB has also established an Electricity Strategic Fund (ESF) meant to generate sustainable funding for the electricity sub-sector.