JESUIT Centre for Theological Reflection (JCTR) says the proposed electricity tariff hike is likely to worsen the economy and perpetuate high cost of living.
According to a statement read on behalf of JCTR by programmes officer Chanda Chileshe, the upward adjustment of tariffs would make electricity unaffordable, especially for the most vulnerable in society.
“ Zesco is basing proposed adjustments of tariffs on prevailing economic conditions such as the rise in the prices of goods and services and fluctuation of the Kwacha…. Zesco ’s equipment and supplies are procured in foreign currency, therefore, weakening of the Kwacha against the dollar is making procurements expensive for the parastatal,” Chileshe said.
“The proposal by Zesco to increase electricity retail tariffs will likely worsen Zambia’s economic performance and perpetuate the high cost of living. Electricity is a basic need that households, small businesses, commercial zones, mines and other industries depend on to run a number of activities. The proposed tariff adjustment shows that the residential lifeline consumption up to 100kwh will increase by 213 per cent from 0.15 kwh to 0.47kwh. The commercial consumption up to 200kwh will increase by 98 per cent from 0.54kwh to 1.07kwh. The social service tariffs will increase by 143 per cent from 0.49kwh to 1.19kwh. Maximum demand tariffs from 16kva to 300kva will increase by 75 per cent from 24.45kva to 42.79kva.”
Chileshe added that production in industries would go down due to a hike in operational costs that would be caused by the increase.
“The upward adjustment of tariffs will make electricity unaffordable, especially for the most vulnerable and this will have adverse impacts on our economy that is currently struggling to provide social protection mechanisms for its poor,” Chileshe stressed that.
“Production in industries is likely to reduce due to increased production costs and these higher production costs will be passed on to the consumer. Reduce production, in turn, has the potential to result in job losses. In the past, it has been noted that low-income households have turned to charcoal as an alternative energy source when the cost of electricity increased or if load shedding was rampant. This, however, will have a negative impact on our environment and will exacerbate the effects of climate change.”
Chileshe further said the last increment in electricity tariffs sent the cost of foodstuffs to the ceiling.
“JCTR notes that in 2017 when electricity tariffs were revised upwards by 75 per cent, the JCTR Basic Needs Basket started going up, shifting from ZMW4,957 in December 2017 to ZMW 5,229 in January 2018. Ever since that sharp increase in electricity tariffs, the cost of living has remained high and unaffordable for the majority poor and most vulnerable in society,” JCTR said.
“It is from this experience that the JCTR strongly opposes Zesco ‘s proposal to revise tariffs upwards, especially at a time that Zambia is having serious financial distress. Recent struggles to pay civil servants, reduced number of bursaries offered despite developing mechanisms to have former students repay loans, high unemployment rate at 41.2 per cent (LFS, 2017), high fuel price and the high cost of living as measured by the JCTR basic needs basket which standsK5,331 for February 2019.
“It is quite disheartening that Zesco can propose a tariff increase that hits hardest on households who will face the largest percentage increment at a time like this.”
Chileshe further urged Zesco to discard its intention to hike the electricity tariff.
“Therefore, JCTR urges Zesco to drop the proposed tariff adjustments for the consumer categories listed above. To address the issue of Zesco ’s increased operation cost, JCTR urges the government to revise the power purchasing agreements made between Zesco and individual companies to facilitate review of electricity tariffs for mining companies. JCTR further urges Zesco to focus its efforts on alternative sources of energy, for instance, promoting the use of renewable energy which includes solar and biogas,” said Chileshe.
“Promoting renewable energy is one way of diversifying the energy sector which has for a long time depended on hydro power. Depending on hydro power has become a liability because of the unpredictable rain patterns and changes in weather. Energy diversification should, therefore, be considered as a number one priority for Zesco and should be widely promoted through research and education of the public.”
JCTR is among other stakeholders who have called for the reconsideration of the proposed tariff hike for electricity.