Articles

The insanity of cheap electricity in Zambia

Any one of us given a choice between cheap power available for only 3 hours every 2 days versus electricity that is 5 times more expensive but available 24/7 will take the expensive power any day. The common argument against expensive power is that it will hurt the poor, but it is a totally ludicrous argument because the poor are already being hurt by the fact that almost all the businesses that can afford to have already bought generators and are passing on the cost of the more expensive electricity from the gensets to their customers.

Others have bought expensive solar equipment that was not budgeted for and that cost is also being passed on to consumers. So what difference does expensive power from ZESCO make? Businesses that cannot afford gensets and expensive solar equipment have reduced their business activities and laid off workers or are paying them less.

Economic output has reduced which means there is less money in the proverbial pocket and that also hurts the poor. The few businesses with gensets are charging more for their goods and services as supply remains lower than demand. That also hurts the poor! Imagine the welder or metal fabricator from Garden Compound who can no longer make gates for customers because power comes at 2am in the morning when he is sleeping and not at the workshop.

Another common but equally ludicrous argument is that expensive electricity will not cause water to increase in Kariba Dam. No it will not, but it will force every one to use less electricity than normal and leave more power available from the little that is there for those that can afford and they can be productive and create economic growth. We are at around one third our normal generation capacity in Zambia but we are rationing that little power.

If the price of electricity tariffs went up let’s say 5 times and someone is spending K500 per month on power and that shoots to K2,500, they will be forced to turn off power until when they really need it. There will be no more baking cakes in a big electric oven, no more turning on the 60 litres geyser and no more using the air-conditioner. They will reduce power usage and millions of others will do the same which will make more power available for everyone.

Aside from these common-sense arguments, if the prices of electricity tariffs go up, a lot of investors will get attracted to invest in power generation because they want to make a killing. They will be literally falling over themselves to rush and invest in Zambia and there will be no need for anyone to fly out in an expensive jet to persuade them to come to Zambia. There will be no need to sign MOUs that do not solve anything right now.

It is so sad how we the Zambian people are suffering because of political expediency, because people in leadership falsely believe that keeping electricity tariffs artificially low will endear them to the public. The Board of Directors of the Energy Regulation Board is clearly not independent. They commissioned the electricity Cost of Service Study and they already know what it says; that Zambian power is too cheap and not cost-reflective.

Instead of acting decisively to approve all ZESCO tariff increments immediately (and I write as someone who wrote to ERB over this), they would rather dance to the tune played to them and refuse to make sensible decisions. We even have some people claiming that an increase in tariffs was already approved by ERB, yet that approval is spread over 5 years. Inflation may wipe out all the increases and it will be an academic exercise.

All this talk of new power plants being approved or built makes no difference because it takes years to build them. Besides, all Independent Power Producers will demand a higher cost-reflective tariff above what ZESCO is selling to consumers. The Ministry of Energy Permanent Secretary Peter Mumba so far is the only prominent government official who has shown any shred of common-sense when he said that more expensive power is better than nothing. He revealed that ZESCO sells power on average at K1/kWh but buys at K3/kWh. This is crazy!

ZESCO has been hamstrung and made moribund by politicians. Their $3 billion debt will keep ballooning until they are bankrupt and cannot deliver services properly even with Kariba Dam full. Of course ZESCO is inefficient and bloated with too many employees and fat salaries and allowances for the top brass, but that is because the people upstairs use and abuse parastatals to stuff them with party cadres and relatives, plus give fat contracts to cronies. Zero chance that they will ever demand for reforms at ZESCO.

The current load shredding, oh sorry, load shedding has been caused by politicians insisting on political expediency. There is a lot of anger in Zambia, especially considering that politicians can afford to buy expensive solar equipment using their fat salaries and fat allowances. To add insult to injury, ZESCO has set up a credit scheme for their employees to buy solar equipment at a low interest rate. What a massive slap in the face as they tell you to switch off appliances in your home and consume less power. Some animals are indeed more equal than others.

Email
LinkedIn
WhatsApp
Twitter
Facebook
XING
Print