Economist Oliver Saasa has warned that a substantial upward adjustment of electricity tariff by the Zambia Electricity Supply Corporation (ZESCO) will have a negative effect on the inflation rate which has fallen to its lowest in ten years.
Professor Saasa says any high upward adjustment of any major input such as fuel and energy would have a ripple effect on inflation rate in the country.
The inflation rate for the month of February has dropped to 6.0 percent; it’s lowest in ten years according the Central Statistical Office (CSO).
The year to year inflation dropped to 6.0 percent from 6.4 percent in January, a development which has been attributed to a reduction in the cost of food stuffs.
Prof. Saasa however stated that an enormous upward adjustment of electricity tariffs would erode all these gains.
He has since appealed to ZESCO to ensure that electricity tariffs are not adjusted to a level that would disturb the micro economic fundamentals.
ZESCO recently u-turned on its proposal to hike electricity tariff by 25 percent which was to be effected on May 1, putting the proposal on hold until the new Energy Regulation Board (ERB) is put in place.
Prof Saasa who expressed happiness with the six percent inflation rate recorded for the month of February stating that the country now has a challenge on how to maintain the inflation at the level it has dropped to.
He said the drop in inflation rate was always a positive development as it leads to a reduction in the cost of doing business and consequently results in increased productivity.
The renowned economist stated that the above development means that government collects more revenue through tax.
He also said consumers will also not experience reduction in their purchasing power; a development which he said could help put more money in people’s pockets.
ZANIS
Tell them Prof.
uhm, okay prof saasa. But economists always have different views on a subject. Next economist please, but make sure your opinion is not based on the impact on your own pockets, all too often true of these guys! Like mmembe and his post!
Failure to increase electricity tarris substantially will force government to have to recapitalise ZESCO. The taxpayer looses either way, the better evil is to increase the tarrifs by atleast 30% for ZESCO to keep up payment to suppliers and manatain huge salaries for its staff.
Before the above is effected, ZESCO must sweep its house clean. There is too much corruption, theft and intimidation in the organistaion. In fact there is a mafia kind of arrangement and criminal gangs within ZESCO. It will not be an exaggeration to say there is a zesco within ZESCO where workers clandestinely install power within Lusaka and other far flung places without the company benefiting a single dime. Management is aware of this and are too timid to deal with this problem for fear of losing their jobs because these crimnal gangs are very well organised and can turn the tables around. How did the current MD lose his job under MMD? It was because he attempted to fight organised crime in the organisation. Countless uncrompromising managers and security officials have lost their jobs
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