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Zesco is totally dysfunctional – Danckwerts

CHOMA farmer Bruce Danckwerts says Zesco remains a totally dysfunctional organisation.

In his submission read by Livingstone farmer Ruth Henson, Danckwerts opposed Zesco’s application to the Energy Regulation Board to increase electricity tariffs.

“I wish to reject the Zesco application, mostly because Zesco remains a totally dysfunctional organisation. I supported the last tariff
increase only for them to squander those funds on hundreds of large billboards that serve absolutely no purpose,” he said. “Furthermore, these billboards are now a maintenance liability. Therefore, there should be no tariff increase until these billboards are sold off to the advertising companies and the proceeds used to pay Maamba Collieries for the outstanding monies owed, so that at least they can perform their function.”

Danckwerts said the fact that the Zesco board could embark on such a waste of funds shows that they are not fit to hold office.

“If we don’t take this disciplinary action (removing the board), then the current board might well be tempted to embark on a similar scam. Their application of 113 per cent tariff increase reflects their incompetence. The 113 per cent tariff increase they are asking for is not a weighted average increase (as they claim) but just a simple
average of the five categories they list,” argued Danckwerts. “To be a weighted average they have to adjust the impact of each category according to how much electricity is used in each category, which they have not done. The ERB has been trying to commercialise Zesco for about 20 years now
and I don’t think it has gotten any better. I think it has been getting worse, but that may be because I have become older and more cynical. Part of the problem is the ERB itself.” 


Zesco director of generation Yona Sichalwe announced that the utility intends to increase commercial tariffs up to 170 per cent while
service customers would see an increase of 143 per cent. Residential customers are to be charged an extra 106 per cent.

If ERB approves the tariffs, Zesco expects to earn K16.056 billion in the first year.

Sichalwe said Zesco’s profits before tax dropped from K0.3 billion in 2013 to a loss before tax of K2.8 billion in 2018.

He said Zesco’s operating costs increased from K2.2 billion in 2013 to K13 billion in 2018, while the turnover increased from K2.3 billion to
K9.5 billion over the same period.


“Zesco proposes to increase retail tariffs by an average of 113 per cent in 2019 rising from an average of K0.77/KWH (kilo watt hour) to K1.64/KWH,” Sichalwe said. “Customers in the commercial category will face the largest
increase at 170 per cent followed by services, and residential customers with increases of 143 per cent and 106 per cent respectively.”

He said the cost of sale increased from K0.77 billion in 2013 to K5.7 billion in 2018, signifying an increase of 637 per cent and 313 per cent respectively.


Sichalwe, however, indicated that Zesco planned to abolish the monthly fixed charge for both commercial and residential customers.


He said Zesco’s application to vary the tariffs was meant to bring the company closer to its operation and capital expenditures.


Sichalwe said Zesco’s new investments included the US$48 million Lusiwasi Upper, a 15-megawatt hydro scheme, expected to be commissioned this 
year and the US$2 billion Kafue Gorge Lower, a 750-megawatt hydro scheme, expected to be commissioned in next year.


On transmission projects, he said there were eight projects which include the Kasama-Nakonde 330kv line which is expected to increase regional trade and security which would cost US$288 million and expected to be commissioned in 2023.


And Samuel Banda of Dambwa North-Extension in Livingstone caused laughter when he urged Zesco not to compare the tariffs of other countries which use coal bought at a cost. He said Zesco was using
free water from Zambia’s rivers.


Banda said Zambians were losing interest in the ERB call for submissions over Zesco tariffs as reflected in the 98 people that made submissions.

He said instead of explaining why tariffs should be increased, Zesco should have presented a staffing level PowerPoint so that people could advised who needed to be retrenched.

Trade Kings spokesperson Ernest Mande, who is also the group’s engineer, said the cost of the company’s products such as Boom would be more
expensive while similar South Africa products imported into the country would be cheaper by at least K40 if Zesco was allowed to increase the tariffs.

He said in 2018, Trade Kings paid Zesco K6.7 million for electricity and with the tariff increments being proposed, his company would have to pay in excess of K21 million.

“How are you going to retain Zambia to be competitive?” Mande asked.


He condemned Zesco for bring more staff at the public hearing outnumbering its customers, adding that if the meeting was to be put to a vote it would just be a vote from workers who wanted to
protect their interests.


Ruth Henson said if tariffs were to be increased she would have to increase her hammermill costs from K6 to mill a bucket of maize for villagers surrounding her farm to K8 adding that Zambians would have to revert to pounding maize using a mortar and pestle.


ERB board vice chairperson Ng’ande Mwanajiti said 98 Zambians had made submissions to the ERB on Zesco’s application to vary its tariffs.

He said that Zambia was facing the worst ever power deficit and that it was up to Zambians and the ERB to find a way forward as measures
were being taken to increase power generation.

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