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Zesco proposes 75% tariff hike

ZESCO has announced plans to increase electricity tariffs by 75 per cent this year alone effective May 1.

According to the notice of the tariff adjustment, Zesco stated that the increment would cover domestic, industrial and mining consumers.

But Zesco has retreated on its earlier plan of charging mining firms $10.35 per kilowatt hour after settling for $9.30 per kilowatt hour.

In justifying the increment, Zesco stated that the current electricity tariffs in Zambia were not cost reflective and there was need for current electricity tariffs to be gradually adjusted to cost reflectivity for retail and mining consumers.

“In view of the above, Zesco proposes to effect a 75 per cent increase in tariffs in 2017 to be implemented as follows: an initial 50 per cent increase effective 1st May 2017 and an additional 25 per cent increase effective 1st September,” according to the notice. “The benefits [of the power hikes] will include, among other things, the enhancement of security of supply through attraction of investment in power generation and energy mix. Furthermore, the tariff increase will ensure that Zesco has adequate revenues to continue purchasing the electricity shortfall from local independent power producers as well as imports from the region.”

Zesco also announced that tariff increase for mining firms would be backdated to January this year.

“It has been agreed effective from 1st January 2017, the mining tariff will increase to US cents 9.30 per kilowatt. Thereafter, the mining firms will be determined based on the results of the cost of service study,” it stated.

The state power utility stated that it had applied to Energy Regulation Board to approve the new tariff hike.

“ERB will undertake a public consultation process in order to receive consumer’s views on the proposed increase prior to making its final decision,” stated Zesco.

In December 2015, the government announced a 300 per cent tariff increments at the height of power shortages when Zesco was importing power at US dollar cents 18 per kilowatt hour to meet local demand.

The energy ministry also justified the increase as one of the measures to lessen pressure on the treasury which was struggling to meet power subsidies.

However, fearing to lose the 2016 elections, President Edgar Lungu announced the cancellation of the tariffs in January last year.

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