ZESCO utility company have increased the residential band from 100kWh to 300kWh units with the tariff remaining the same at 0.15.
It is important to note that in accordance with the requirements of section 8 sub-section 2 of the Electricity Act CAP 433 of the Laws of Zambia, ZESCO propose to implement tariffs in two stages with the first stage being a 50% increase effective from 1 May 2017. The proposal DOES NOT affect the Metered Residential Tariff. It actually increases the band from 100kWh to 300kWh. The consumers under this tariff are classified as R1.
It is only the R2 classification that will be subjected to the new proposed tariff. This includes consumption above 300kWh.
Other consumer categories that will be subjected to the new proposed tariffs include; Commercial, Social Services, and Maximum Demand tariffs.
The background to this development needs to be appreciated in the interest of:
1. Attracting new Power Investments
The tariff was intended to attract a multi billion dollars portfolio of generation projects which are important to diversifying the generation mix to avoid the devastating effects of drought that is currently being experienced.
The portfolio of new generation projects includes renewable energy, Solar Power plants, and Thermal (coal) power plants which are not affected by drought. This will greatly improve the security of supply in the medium to long term.
Below is a list of some of the projects which are currently under construction/ commissioning or are to commence construction within the next twenty four (24) months.
These plants are being developed by ZESCO:
– EMCO Coal Fired Thermal Plant which has a capacity of 340MW at a cost of US$ 750 million
– Kalungwishi Hydro-power Project with capacity of 247MW at a cost of US $700 million
– Ndola Energy Heavy Fuel Oil Plant Phase 2; capacity of 55MW and cost of US $75 million.
– Batoka Hydro-power Project with a very impressive capacity of 2400MW at a cost of US $6,000 million.
– Kafue Gorge Lower with capacity of 750MW at a cost of US $2000 million
– PV Solar Power Plant with capacity of 100MW at a cost of US $200 million.
The above investments are projected to cost approximately US $9.7 billion and increase generation capacity by an additional 3,800 MW.
The new tariffs will greatly enhanced the bank ability of the above projects, thus ensuring that finances are mobilised within reasonable time and that the projects are delivered as per scheduled time frames.
Secondly, ZESCO has entered into Agreements for purchase of power from Independent Power Producers (IPPs) such as Maamba Collieries Ltd (300MW), Ndola Energy Company Ltd (105MW) and Itezhi Tezhi Power Company Ltd (120MW). The tariffs from these IPPs are significantly higher than ZESCOs prevailing bulk and retail tariffs.
The new tariffs are intended to enable ZESCO meet its monthly billing obligations to the IPPswhich is crucial for the sustainability of both the IPPs and ZESCO.
For the Electricity consumer, these developments are expected to translate into improved service delivery, availability and reliability of supply.
We therefore urge citizens not to allow a section of society to mislead the nation in a bid of gaining political mileage at the expense of progressive, sustainable and equitable development for all.