Exclude Zesco from energy distribution, proposes Kamanga

ENERGY expert Andrew Kamanga has called for a reorganisation of the energy sector to enable more private participation in distribution.

And Kamanga, proprietor of North-Western Energy Corporation, says government must do more to ensure small entrepreneurs grow into big corporations in order to create more employment opportunities and subsequently grow the economy.

Kamanga was speaking when he featured on Lusaka’s Capital FM Radio programme hosted by veteran broadcaster Frank Mutubila dubbed ‘Frank on Capital.’

Kamanga, who is also a business consultant, allayed fears that unbundling the power utility, Zesco Limited, would result in financial losses.

He said to the contrary, Zesco would have more money.

“What you probably need to do, and this is what we have been advocating for, for years, we need to try and see if Zesco can be reorganised; we need to reorganise the power market. And how do you do that?” he asked. “If I was a policy maker, my view, and this is purely personal and it’s a model that has worked in different jurisdictions, you need to say yes, Zesco can concentrate on generation and transmission. In the new Act, we even have a provision for Open Access and this is where everyone who is generating power is free to use the existing infrastructure. And this is a part where the regulator has a role to play because you can now say, the wheeling charge for the use of open infrastructure is regulated and whoever is generating should be free now to be able to go and sell their power to wherever they feel the market is, nothing should stop Maamba from having a contractual agreement with any of the mining companies because that’s how the market should evolve.”

Kamanga said the country needed a fully functioning mining sector to increase economic activities.

Zambia currently produces 700,000 tonnes of copper, with the newly appointed finance minister saying government would be seeking to get two million tonnes in 2026.

“Without doubt, we need the mining sector to be fully functioning to be able to increase the economic activity of the country; even the foreign exchange. The minister of finance was on TV talking that, trying to see if by 2026 we could have Zambian mines produce two million tonnes of copper. That is really a tow-order because we are currently sitting at 700,000 tonnes,” Kamanga said further.

“… So, for the power sector, Zesco should concentrate on transmission and generation; all these other generators should also have a opportunity to negotiate their own supply agreements with the end-user customers but most importantly beyond transmission. And this is where the bottle-neck is, because the biggest problem we’ve had in power sector is the distribution and I think this is where we are involved. We are the only private company involved in distribution. We do have an agreement with Zesco to buy in bulk and the ERB recently came up with the tariff for distributors, which is a very good signal; which means that the market is ripe to allow for more players into the distribution space. And I think these are the changes we need to embrace.”

He also dismissed fears that moving Zesco away from distributing power would result in the rise of electricity tariffs.

Kamanga said there is a policy to protect domestic consumers and that the regulator would always be there to look at the final tariff for domestic consumers.

“Now, there is always fear that if Zesco is moved away from the distribution space the tariffs may be higher because there is a deliberate policy to protect the domestic consumers. But I don’t think that should scare anybody because the regulator is still in place to be able to ensure that they look at the final price to the end users,” said Kamanga. “…in each province you can have different distributors but the basic idea is that Zesco will not lose out. But the basic argument is that if Zesco is producing 3,000 megawatts they will sell to the same distributors, but they will not be involved in distribution in terms of cost because running a distribution network is the most expensive part of the chain. So, for me if I was in government, I would really think seriously about changing the role of Zesco because production will remain the same, even payments. Zesco will become cash-rich because they will be dealing with distribution companies who will be paying upfront. So, from that perspective there is no risk but there has always been this fear that Zesco is a national asset and we should not allow it to be given to the private sector. But what we should be saying is, can we limit the role of Zesco up to transmission but allow those who are willing to take a risk to put in the capital and then make their money and a win-win for everyone.”

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