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Govt can’t continue subsidising Zesco – Mundende

GOVERNMENT cannot continue subsidising Zesco Limited because the company is capable of meeting its obligations if allowed to operate as a business by charging correct tariffs, managing director Victor Mundende has said.
And Minister of Energy David Mabumba says the proposed 75 percent hike in electricity tariffs by Zesco should be supported since it is a matter of national interest in the country’s quest to industrialise the economy.
During a press briefing on the proposed electricity tariffs on Tuesday, Mr Mundende said Zambia requires regular tariff increases to secure reliable power supply, and attract investments in the sector.
“If there is no tariff increase, Zesco will not be competent enough to supply electricity at required quantities in an efficient manner. How does Zesco provide better services when it buys power at 10 US cents and sells at four US cents?
“This shows that someone [Government] is paying for the difference, yet the company can sustain itself if it charges the right tariffs, and the public resources can be spent on other needy areas,” he said.
Mr Mundende said economic activities in the country have outstripped power generation capacity.
“At independence, we had about three million people but now are over 13 million, and in 1992, Zesco had 200,000 customers but now it caters for 900,000, so the company needs to grow by meeting demand of customers.
“Due to low tariffs, there has been no power project since 1976 [Kariba North Bank] until 2013. We can only meet the demand of customers through a correct tariff, otherwise, unreliable supply will continue. Lack of investments will constrain the equipment and there will also be failure to attract investments in other sectors such as mining, agriculture and manufacturing,” he said.
And Mr Mabumba said the existing tariffs make it impossible for Zambia to attract investments in the sector.