‘Cost reflective tariffs will promote investment’

IT IS only logical that the electricity tariff structure is enhanced to ensure that Government has the money to promote investment in the energy sector, says Policy Monitoring and Research (PMRC) head of monitoring and evaluation Salim Kaunda.

Mr Kaunda said PMRC supported the view by the World Bank that a “substantial increase in electricity tariffs” would definitely be required to meet the cost of imports and supply in 2016.

He was commenting on Section 2 of the 6th Zambia Economic Brief by the World Bank which focuses on the energy situation, particularly electricity, and provides options that must be undertaken to cushion the power deficit.

Mr Kaunda said there was an urgent need to address constraints in energy procurement as it had been pointed out that the existing constraints were responsible for the delays of selected projects such as Maamba and Itezhi Tezhi.

He also said restructuring the energy market implied that private power providers would be able to supply to their own markets, thereby shifting away from the single buyer model where all supplies were directed to ZESCO.

“Another issue of key interest that we note concerns the restructuring our energy market and review the single buyer model.

“This restructuring implies that private power providers will be able to supply to their own market, thereby shifting away from the single buyer model where all supplies were directed to ZESCO. This will allow for a fair playing field in the sector,” he said.

He said PMRC believed that the economic fundamentals must be corrected simultaneously as energy challenges were addressed, adding that the current state exerts pressure on the Treasury for electricity imports on a monthly basis.

“PMRC further holds to its position of the need for cost reflective tariffs in the medium to long-term in order to attract independent power producers and ensure that Government has extra revenue to invest into the development of the energy sector.

“However, this must be done with a pro-poor focus to ensure that it is gradual,” he said.

Mr Kaunda said PMRC was encouraged to learn that the Secretary to Cabinet Rowland Msiska had committed to ensuring that procurements under the energy sector went into emergency mode.

“This decision is likely to improve procurements and ensure that some elements of bureaucracy are eliminated and also speed up the completion of some projects,” he said.

Mr Kaunda said Zambia needed to immediately learn and implement lessons on how countries such as Morocco, Rwanda and Kenya among others were focusing on solar for their electricity needs.

He explained that Morocco was expected to launch the 1st phase of the US$9 billion mega solar thermal plant set to be the world’s largest while Rwanda embarked on a solar programme that would be the largest in East Africa.