Minister of Energy David Mabumba says it is inevitable for government to increase electricity tariffs as the sector will die as no investors are interested in it in its current form.
Speaking today at the Patriotic Front Interactive Forum, Mr Mabumba disclosed that the proposed 75 percent tarrif increase was a national emergency.
He disclosed that government has been subsidizing over $500 million annually.
Mr Mabumba explained that Zesco actually spends more than they generate. He said Zesco imports electricity at 12.9 cents per kilo watt but yet sells at 3.3 cents per kilo watt forcing government to subsidies this difference.
“It is just that Zesco has been a very strong parastatal otherwise we would have forgotten about it because the amount of subsidies that government has been topping up is so huge that Zesco are not able to generate internal funds for them to invest in the system,” Mr Mabumba explained.
He noted that sadly this in the short term would have an impact on the cost of living but pointed out that the long term goal would be productive for the whole nation.
He emphasised that the current electricity tarrifs in Zambia were not cost reflective and thus have been turning away investors.
Mr Mabumba noted that the PF government still wanted to protect the consumer and to start with this increment will only be felt when consumers use above 300 units.
So in other words you are saying that you implementated poor policies that were not sustainable and now you want to put the burden on innocent people. No one forced you to subsidize the industry. To me it looks like you trying to find a scapegoat for your failures. Just accept that pf has failed
Hon Mabumba, Understood but how much are the mines consuming and contributing to the national power bill? Could you kindly put this data in the public domain so independent Zambian experts can freely share how we could turn the sector viable to drive growth in the economy. If not properly planed and executed, such radical though inevitable measures have the propensity of adversely choking the economic. Let’s candidly look at the whole socio-economic strata constituting 85% of the national population. Most Zambians are bound to be systematically plugged out of the economic life-line because these subsidy cuts could see the bills of some consumers jump five-fold forcing small businesses fold-up in ripple effect. We appreciate the logic that a sustained total freeze on tariffs for years has…
We appreciate the logic that a sustained total freeze on tariffs for years has left the power grid on the brink of collapse. If the subsidies for the generation of electricity in 2016 was > $500 million, which is a significant portion of GDP, how much did the treasury lose in financial leakages with respect to the Auditor reporting for the same year?
Targeting reduction of subsidies by $500 million this year as part of a drive to reduce a gaping deficit that widened sharply by itself without corrective actions with a will to to financial leakages and countless fiscal chaos in ministries and Departments will not address any our woes. Mwanawasa regime started implementation of an Integrated Financial System in GRZ to capture all Receipts and payments, whats the status?
No Mabumba Mmmh! Mmmh! YOU ARE NOT BEING HONEST
=============================
You sound like not even the proposed tariff will be enough. I mean how many times are you going to hike tariffs hiding behind the “cost reflectiveness” as it relates to luring private investors. For God’s sake Zambia is Zambia and not Malawi or any country in the region. I doubt if the imports -12.9 cents /export -3.3 cents per kilo is real. You want to hike the tariffs year in year out. I am afraid the solution could be within ZESCO. Don’t touch this or you gonna regret this politically.
Minister you must change the way Zesco operates- Zesco middle management directors get over K40,000 per month, then you add allowances, you add a company vehicle which is always a top of the range Luxury SUV costing in the range of K350 to K400,000 (inclusive of insurance and warranty) this comes up to approximately K1,000,000 (one million Kwacha) cost per year for a mid management director- then how much for senior managers? How many managers in total has Zesco got? These are the problems we are facing across different govt institutions- the ones at the top are taking all the resources resulting in the citizenry having to pay for their bills. Donors since the 1990s are aware of this bad habit of African govts but have opted to turn a blind eye so that African govts continue to misuse the…
Ctn…so that African govts continue to misuse the funds that are donated to them. Its a deliberate action on the part of donors so that we fail and sadly the mindset of top govt officials is always the same they get excited with allowances and latest SUVs- they are disconnected with the people at the bottom, its a very sad and vicious cycle! We need a change in this sad cycle! These are simple issues that any opposition party worth its salt are supposed to bring to the fore for debate but rather they bring up nonsense and if they bring up these issues its only in a few sentences they never release full statements on such matters.
Investors are discouraged by high cosy of electricity, but yet PF says please raise even more fees.
Where is ship of electricity which Dora imported last year? We heard was to reduce tariffs.
Even Edgar went to Nacala in Mozambique to yawn over the same.
Interesting how is it that in a recent article we were told we spent USD 504 million in Power importation and now we are told Govt has been subsidizing USD 500 million of power. I am not sure but I am finding these numbers to be suspiciously close to each other. Given both are annual figures ? what are we to read in this ?
I thought subsidies were removed during MCS’s era
Do your sums properly bwana minister, as long as the cost of living is low for the people at the end of day
“Zesco imports electricity at 12.9 cents per kilo watt but yet sells at 3.3 cents per kilo watt… ”
And why is that?
BECAUSE ZESCO UNDER LUNGU AND HIS PF HAVE FAILED TO MANAGE OUR POWER GENERATION!
Just look at other countries with hydropower. They GENERATE it for 3/4 cents a KW! If these clueless clowns were not so busy employing useless relatives and stealing money that should have been used for development of new generating facilities we could be PRODUCING IT for this price. We have to IMPORT IT for 12.9 cents a KW BECAUSE SATA CANCELLED the Kafue Gorge Lower in 2011.
And what did Lungu say then? Another Jamesoni please!!!
They are just doing what IMF t
They are just doing what IMF told them to do. How can you put the interest of an investor first before your own poor people who vote for you. Yes the Zambian government has to bear cost because Zambia is a poor Country. These people are thinking backwards.
That Euro bond has brought hovac to our economy. It’s now time to dance to the music. Yaba
Mr Minister, please start by disclosing how much revenue ZESCO makes and how much of it goes to personal emoluments. While you are at it confirm if the 2,000 units allocated to its employees has been discontinued then maybe we can hear your plea. The truth of the matter is that Zambians are not in a position to afford this increase .there will soon be no middle income group to talk about. The standard of living will decline as people will resort to using charcoal instead of electricity
there is too much commend in this government sometimes I even ask God what sin Zambia as a country committed to deserve this kind of Government
Ba NEZ mulichikopo and please before you comment, read what the minister said. We can’t continue with subsidies and only consumers of over 300w per month will feel the effect of the increase. The majority of Zambians don’t use that much.
@ nop or is it nyoko? Wecikopo niwebo. Do you actually believe these guys ati the change will only affect those who use more 300W/month? Kula mucimutwe iwe
I used to think that Zesco produces/generates electricity, so it just imports. No wonder it’s been difficult for it to thrive. Don’t you think if it was generating its power and sells/export this story of increasing tarrifs wouldn’t arise? To me it sounds more of failure to manage the business than tariffs because even with high tariffs as long as you don’t know what you are doing Zesco will still fail. Start by eliminating the problem and see if you will still be talking about tariffs increase.
THE NEED TO OPEN UP FISCAL SPACE TO CONSOLIDATE THE BUDGET SHOULD NOT SIMPLY BE DONE IN A SHORT PERIOD OF TIME
THE MINISTER WAS RECENTLY AT THE WORLD ECONOMIC FORUM HE MUST ALSO HAVE READ THE OUTCOMES IN THE REPORT “THE AFRICA COMPETIVINESS REPORT 2017” HE NEEDS TO SEE THE PROGRESS MADE IN ENERGY AND ECONOMIES BY PARTICIPATING AND SEE WHAT TIME AND POLICIES IT HAS TAKEN TO REACH THOSE MILESTONES IT CANNOT BE DONE OVERNIGHT THE MINISTER MAY NOT INCREASE TARIFFS BY 30% THIS YEAR IT WILL BE SENDING SERIOUS DISRUPTIONS TO THE SMALL SCALE DEVELOPING INDUSTRIES AND HOUSEHOLDS WITH BELOW 300 UNITS IN INCOMES IT WILL BE WORSE
I HOPE THE MINISTER IS NOT…
HURTING HIS FOOT HE HAS THE CORRECT ENERGIES TO DIRECT HIMSELF TO AN INTERGRATED ENERGY FRAMEWORK AND ALLOW ZESCO TO INVEST IN A SUSTAINABLE I HOPE THE MINISTER KNOWS THE AVERAGE LEVELIZED COSTS AND SEE THAT ZESCO IS STILL HIGHER THOUGH MARGINALLY EFFECTIVE THAN THOSE WITH LEGACY POWER PLANTS AND HEAVY FORMS OF POWER PLANTS
I THINK THE MINISTER WILL NEED TO DO AN IMPACT ASSESSMENT BEFORE ANY INCREAMENT YOU MAY CONNECT THE RURAL BUT THE CUSTOMERS MAY FAIL TO BE ON THE GRID
TAKE A STUDY OF POVERTY IN ZAMBIA AND SEE HOW THE INCREAMENT WOULD BE
THE TRUMP ADMINISTRATION IS INVESTING IN INFRUSTRUCTURAL ITS DOING A LONGTERM HORIZON USING MUNICIPAL…
AND OTHER THE SAME SHOULD BE YOU WILL NEED A LONGTERM INVESTOR OF LONG HORIZON ABOVE 50 YEARS NOT NECESSARILY MOTIVATED BY PRICE IN THE SHORT TERM BUT ONE WHO WILL ACCRUE A DIVIDEND OVER A PERIOD OF TIME I THINK THE MINISTER SHOULD HAVE AN INTERGRATED APPROACH RATHER THAN A SIMPLISTIC VIEW THE INCREAMENT WILL SHOW IN THE PERFORMANCE OF ECONOMIES AND HOUSEHOLDS AND WILL BE A ZERO SUM GAME
ENERGY PROJECTS AND INVESTMENTS IN ZAMBIA SHOULD BE MODELLED WITH THE ECONOMY ON THE LONGER TERM AND NOT SHORTERMISM AS THE DEVELOPMENTS OF MARKETS AND SECTORS IS NOT AS COMPARABLE TO OTHER COUNTRIES AND THE VALUE OF INCOMES COMMENSURATE CANNOT SUSTAIN SO RESTRUCTURE…
It is a good thing to copy from our neighbors. What is wrong is copying blindly! The GDP strength of those neighboring countries you are copying from is much higher compared to Zambia so they can afford. If it is investment you want to promote, there are better ways. What you are doing is increasing the cost of doing business which will ultimately reduce Zambia’s competitiveness! Why not encourage investment for export purposes without strangling the little left of our economy? Have we looked at the cost structure of ZESCO? Is ZESCO an efficient company? Is the unit cost of production competitive and making business sense? Have we looked at options for cost cutting? What has happened to the idea of unbundling ZESCO before thinking of tariff hikes! The PF trouble is we don’t debate…
The PF trouble is we don’t debate enough with citizens before taking certain steps. That is why we keep on reversing things long after damage has taken place. Don’t increase tariffs yet! Let’s get back to the INSAKA and discuss the pros and cons of this suggestion!
YOUR FISCAL SPACE APPROPRIATELY AND INCREASE TARIFFS IN LINE WITH THE GROWTH IN THE ECONOMY YOU MAY REFEE TO THE BRIGHTER AFRICA THE GROWTH POTENTIAL OF SUB-SAHARA ELECTRICITY SECTOR AND DO AN IMPACT ASSESSMENT THAT FITS IN YOUR ENERGY RESOURCE PLANNING
THEN THE MINISTER IS SUPPOSSED TO BE A GATE KEEPER WHAT ZESCO PRESENTED AT THE MULUNGUSHI ERB MEETING IN THE GRAPHS HAS NO EXPLANATION TO THE INCREAMENT AND THE ASSUMPTIONS AS WE ANALYSE DONNOT SUPPORT THOSE INVESTMENTS THERE NOT SPECIFIC AND CAUSAL IN RELATION AND NOT MODELLED TO SHOW WHY THE INCREAMENT SHOULD BE DONE
SO YOU MAY NOT INCREASE TARIFFS ABOVE 30% BWANA MINISTER WITHOUT AFFECTING THE SECTOR AND CHANGE…
WITHOUT AFFECTING THE SECTOR AND CHANGE YOUR FINANCING METHODS AND FIT TO FIT ZAMBIA LONGTERM EVEN IF YOU INCREASED TARIFFS ABOVE 200% PERCENT YOU WILL STIFF MOVE TO A DIFFERENT CURVE IN COST OVERRUNS THAT MAY BE WAY ABOVE LCOE
SO INVEST IN A SUSTAINABLE MANNER NOT IN A FAST TRACT TO LAND THE SAME ZESCO INTO DEBT OVERRUNS AND EVENTUALLY SOLD
I WOULD RATHER YOU USE THAT TO BUYOFF CEC AND MAKE AN SPV TO FINANCE THESE OVERLY PROJECTS AND LEAVE ZESCO SUSTAINABLE YOU ARE JUST VULTURING ZESCO
People are crying, they are suffering due to your poor mungulu policies. Hear their cries. IMF will kill us like they killed the economy in the 80’s with KK & 90’s with FTJ.
Pf00lish regime has no clue how to fix the economy. They’re interested in sharing tenders from the IMF $1.6 Billion at the expense of a heavy debt burden on its citizens. Electricity in Zambia is already very very expensive.
Zesco needs to retrench the cadres it employed to make it profitable.
How do you expect Zambian products to compete with other products on the international market?
Let’s see , we have blown 10 billion on development while we told the zambians that investors will soon be falling over each other after we build the most expensive roads per kilometre.
Ohh hang on…we can go to the IMF for a bail out. But the IMF are not happy with our governance but in the mean time have pointed out to us we must raise more money as GRZ.
So let’s look at how to tax zambians to raise money for GRZ and Increase the price of fuel and electricity and call it removing subsidies.
THOSE BANKERS AND ENERGY FIRMS AS WE KNOW DONOT HAVE YOUR INTEREST THERES IS TO MAKE A PREMIUM -A HIGHER THAN SUPERIOR RETURN – UNDER THE PRETEXT OF FINANCING ELECTRICIFICATION WE HAVE SEEN THERE PROJECTIONS ON ZESCO FINANCES AND NEEDS YOU WILL NOT ACHIEVE THOSE ASPIRATIONS LIKE THAT SO BE SUSTAINABLE AND CATCH UP WITH OTHERS AND IN A CONSERVATIVE MANNER INVESTING LIKE IN THE MINISTRY PLANS IN OTHER FORMS OF CHEAPER EFFECTIVE RENEWABLES WHILST CREATING CAPACITY
A LONGETRM INVETSOR WITH INTERST TO INVEST IN ZAMBIA ENERGY SECTOR WILL NOT LOO AT THE TARIFF HE WILL INVEST TO GROWTH THE ELECTRICITY PER CAPITAL AND RECOUP IN COMMENSURATE WITH PLANT LIFE AND NOT THESE…
TERM SHEETS AND FINANCING WE ARE BEING LOCKED ITS THEY DONOT FIT THE ZESCO CURRENT OPERATING MODELL AND HENCE YOU WILL BE PROPOSSED TO …….WHICH MAY NOT BE RIGHT FOR MANY ZAMBIANS
AFTER YOU CONTRACT THESE INVESTMENTS YOU WILL STILL BE HOVERING AND THE NEXT THING IS TO REDUCE YOUR EQUITY AND LAYOFF ZESCO EMPLOYEES TO SAVE FOR THE REPAYMENTS AS YOU INCREASING EXPORT TO MAKE THOSE REPAYMENTS FOR THE INTERESTS AND PRICIPAL
I THINL VICMALO SAW THE PEOPLE FROM CHINSALA AND AMAWEBBY THEY SPOKE WELL AND SOFTENED AND LISTENED FROM THE CHINSALI PEOPLE
THE NEED TO INCREASE TARIFFS TO BE REFELCTED IS A LONG RUN MARGINAL COST ISSUE IF THE ENERGY SECTOR WAS GRZ AT…
THE NEED TO INCREASE TARIFFS TO BE REFELCTIVE IS A LONG RUN MARGINAL COST ISSUE IF THE ENERGY SECTOR WAS GRZ AT ONE TIME YOU MAY NOT FAST ANYHOW IT MUST BE WITHIN REAL AND POTENTIAL GROWTH IN THE SECTORS
ITS GOOD YOU ARE DOING THE COST SERVICE STUDY BUT DO ALSO AN IMPACT ASSESSMENTS ON ALL SECTORS HOUSE HOLD AND COMMERCIAL
BE SUSTAINABLE AND RESTRUCTURE THE BALANCE SHEETS CAREFULLY TO NOT DISRUPT OTHERWISE WE WILL LOOSE CONFIDENCE IN YOU DO ALSO A ENERGY INTERGRATED RESOURCE PLAN AND SEE WHERE TO CREATE THE FISCAL SPACE THOSE WIND INVESTMENTS ARE EXPENSIVE TO RUN THAN THE EVER FALLING COST OF HYDRO POWER AS YOU CAN SEE FROM IRENA WORLD ENERGY COUNCIL EVEN THE…
REPORT FROM THE WORLD ECONOMIC FORUM ADOPTED FROM MCKENSEY THE ” Brighter Africa” YOU ARE HURTING YOUR FOOT BWANA MINISTER THINKING THE MULTINATIONALS AND SUPRA WILL CARRY YOU ALL THE WAY NEVER
SEE THE US ENERGY MODELING OR HERE THE NERSA SOUTH AFRICA ESKOM
YOU GROW WITHIN YOUR CLOTHES AND ADJUST AND CUT THE CLOTH TO FIT THE GROWTH YOU MAY SLIM AT TIMES SO DONOT CUT A BIGGER SIZE BECAUSE ADJUSTMENT WILL LEAVE THE CLOTH WORSE THAN BEFORE
ITS BETTER YOU ENCOURAGE THE ZESCO ND ERB TO BE EFFECTIVELY SUSTAINABLE AS THEY ARE DOING CURRENTLY AND MODEL CAREFULLY///
THERE IS OFTEN A STRUGLE FOR ZESCO HOW PEOPLE WOULD WANT IT SYNO TOPSTAR ZESCO LIMITED OR EURO ZESCOM ENERGY AND POWER INVESTMENTS IN PLANTS IS LONGETERM AND THE TARIFF OFTEN A RETURN SPREAD OVER THE LONGTERM
SO CREATE FISCAL SPACE AND SUPPORT ZESCO AND AVOID DEBT OVERHANGS THE NARRATIVE COMPARISON OF LOWEST TARIFF IS NOT SUPPORTED IN THE ZESCO MODEL AS IN LCOE
I LIKE NEW BLOOMBERG ENERGY COST RESEARCH AND RENEWABLE ENERGY TECHNOLOGIES: COST ANALYSIS SERIES THEY SHOW COSTS AS LOWER
LETS SEE AND REVIEW TO LAND WELL
Mr mabumba sir!!without shame you are announcing the hike in electricity tariffs,and also pointing out the subsidy government has been putting for the benefit of the poor Zambian….let’s talk of zesco employees who are over 20000 in the whole country getting 1000 units every month at 50n and huge monies at the same time,so now whom have you been subsidizing with that $500?.
First it was fuel the same subsidize which HE Mr sata removed,Mr Lungu also came and removed,so which one did sata removed?now it’s electricity.so what is it that government going to do for its people.
TO THE CONTRARY AS I CONCLUDE THE COMPETITIVE ADVANTAGE OF ZESCO OVER OTHER REGIONAL ULTILITIES MUST BE SOMETHING THAT YOUR INVESTORS WANTS-NEEDS-VALUES -AND IT WILLING TO PAY FOR TO INVEST IN THE HYDROS AND GRIDS ESPECIALLY WITH OUR SOVEREIGN GOOD POLITICAL RISK
THE TARIFF JUSTIFICATION INCREAMENT THEREFORE IS NOT CORRECT AND NECESSARY APPLICABLE AS SEEN IN MANY ULTILITIES STILL BEING INVESTED IN LIKE IS SOUTH AMERICA WORSEOFF THAN ZESCO
TO PLAY OVERSIGHT TO GUIDE APPROPRIATELY ERB AND ZESCO WOULD BE WISER AND SUSTAINABLY CORRECTLY
ZESCO is the ruling party’s fundraising tool when they are broke they just get this money? Are not just paying for PF cadres to enjoy our sweet the way they are enjoying ZNBC levies?
Poor zambians you think you can develop this country, no country with a dictatorship as ever developed, show me one! You increase fuel all things goes up, increase electricity the same result.
Due to supply not in domino effect past reply on diminishing definition due to loaded empathy with intact sociability in red but a conived gateway giving uptight restrictions with the demand cure firmly at low tactile gas indulgence.
A missing farmer was found inside the body of a seven-metre long python in Indonesia’s West Sulawesi province. Residents in Karossa district cut the snake open and found Akbar Salubiro, who was supposed to harvest palm oil in a nearby plantation, lifeless.
The man’s dead body was fully clothed, and the boots he was wearing were clearly visible in the python’s stomach. “People had heard cries from the palm grove the night before Akbar was found in the snake’s stomach,” village secretary Salubiro Junaidi told Straits Times.
Salubiro went missing on Saturday, March 25, after he went to a remote village on the island of west Sulawesi. “Initially Akbar set out from his home to go to harvest palm. After not returning to his home, people looked for him,” Salubiro’s neighbour said…
THE INVESTMENTS IN ENERGY ARE BIGGER THAT 30 YEARS OF ZESCO INCOME DERIVED FROM ITS CURRENT ZESCO CUSTOMER BASE
OKAY THIS MANU ITS THE BIG FINANCING NEEDS CAN SWALLOW THE ECONOMY LIKE MUNU ABOVE ANALYSING AND DEVELOPING ANY FINANCING SCHEME FOR POWER PROJECTS SHOULD BE DONE AND ALWAYS PERFORMED AFTER SOCIAL ECONOMIC ANALYSIS THE OVERALL COST SO DO A COST OF SERVICE STUDY AND THEN SEE THE IMPACT ON THE ECONOMIES AND DOCUMENT BY SPONSORING THE SAME EITHER THROUGH ZIPAR OR PRMC
COST REFLECTIVE AND PREFERRED DESTINATIONS
The Economist Intelligence Unit’s 2017 cost-of-living indices show Singapore retaining its lead as the world’s priciest city, followed by Hong Kong. Zurich takes third place, and Tokyo and Osaka are fourth and fifth, respectively. Seoul, Geneva, Paris, New York and Copenhagen round out the top 10. New York City is North America’s only representative in the elite top 10 bracket; it also is the benchmark used for deriving the rankings of the other 132 metropolises in the survey. Almaty, Kazakhstan, was the least expensive city surveyed, with Lagos, Nigeria, just behind it. Four of the 10 cheapest megacities are in India – Bangalore, Chennai, Mumbai and New Delhi. Completing the bottom 10 list are Karachi, Pakistan; Algiers, Algeria; Kiev,…
; Kiev, Ukraine; and Bucharest, Romania.
The cost-of-living basket of goods surveyed includes 160 common items of day-to-day purchases that span housing (rent, utilities, cleaning supplies and domestic help), sustenance (clothing, food, beverages and hygiene products), transportation, entertainment, and private schools. A loaf of bread will cost you $14.82 in Seoul but only $0.97 in New Delhi. A liter of gas for your car will suck $1.73 out of your pocket in Hong Kong but only $0.28 in Algiers.
Living expenses depend, in part, on a nation’s level of inflation and the valuation of its currency. In Brazil, São Paulo and Rio de Janeiro have both jumped two spots on the cost-ofliving ladder since 2015, due to rising inflation and currency rebounds. Fractious geopolitics can make cities…
cheaper, but not safer or more stable. Locations such as Kiev, Ukraine, and Karachi, Pakistan, are less expensive but also less livable.
Yet the priciest metropolises can offer some surprising bargains. Costs in Singapore are low for household goods, domestic help and personal care. In New York, a liter of gasoline is only $0.61. You can get a bottle of wine in Geneva for $8.20 and a pack of cigarettes for $4.01 in Seoul.
Living costs change constantly. Over 2017, political uncertainties – such as the outcomes of Brexit and the Trump administration’s actions on trade – as well as a rebound in commodity prices could add to cost instability
The tariff increase is long overdue guys and let’s face it, if ZESCO doesn’t revise it’s tariff now, would you like to go back to the 2015/2016 loadshedding problems we experienced?
I would rather pay a premium and demand that ZESCO provides a quality service than revert back to dark nights and days of frustration of no power.
By the way which country can seriously develop without stable and reliable power? I support Government on this on because with guaranteed electricity all year round, i can plan and work hard to grow my business. Spoon feeding doesnt solve anything and its time we accepted that electricity is an important factor in todays lifestyle and hence a true tariff is okay.
Can someone tell us how much energy the mines are consuming and how much thethey pay. How much does the grz put in to pay for the energy consumed by the
mines?
LOOK AT GERMAN FORESIGHT:
Germany is pursuing green development to cut its carbon dioxide emissions.
• However, a realistic effort to introduce renewable energy sources must balance the “trilemma” of environmental impacts, electricity prices and supply reliability.
• Germany expects to surpass European targets to reach a 40% greenhouse-gas reduction by 2020 and an 80% drop by 2050.
• That means changing from current centralized energy markets to more localized ones.
• The imminent countrywide shutdown of all nuclear power plants is also a factor.
• If Germany can’t improve energy efficiency, renewable-sourced power will cost more.
• Reliable electric service is both a social and an economic good.
• The estimated cost of outages across the economy is €234 million from…
I have no quarrel with the tariff increment if it is going to guarantee adequaye and continuous supply of electricity to me my family my neighbours first and the nation at large.
Even “economic manager” understands this matter and the need for higher tariffs. But what does he do? Just to get votes in 2016 he promised to reduce electricity tariffs by half, which normal Zambians could not buy. Actually its such lies to an enlightened population that cost him votes which he now blames on “hearing” a dead “petition”. Not forgetting instructing miners’ wives abakashi babene to deny their husbands conjugal rights, yes at a public meeting in Chililabombwe! I hope the guy is reflecting hard in that correction facility otherwise if he misses this chance he will remain a donkey forever…
WHEN ONE ONLY KNOWS ABOUT SAIDI OR VOSS ITS A PROBLEM TO SEE AN INTERGRATED APPROACH TO SUSTAINABLE INVESTING
INTERGRATE:
.“Wholesale market prices” – The growing use of renewable energies and a concomitant drop in fossil fuel dependence will lower wholesale electrical prices.
.“Absolute price effects” – Planners must take a hard look at green energy’s affordability for consumers. Right now, lower income customers pay more than their fair share”
…… I hope the guy is reflecting hard in that correction facility otherwise if he misses this chance he will remain a donkey forever.
But somehow this is one minister who when he speaks I fail to understand what he is talking about. He seems to mix up issues and often goes off tangent.
Individual EU members’ sovereignty and control over their national energy programs have resulted in a patchwork of suboptimal investments – for example, Germany invests more than sunny Spain in solar power – that has squandered $100 billion Uncertainty over subsidies has discouraged investors and raised capital costs. The EU’s market policies to achieve sensible carbon pricing have failed.Electricity-sector investments in the OECD totalled $3 trillion between 2000 and 2012, and the industry will need another $7.6 trillion by 2040 to meet the objective of deriving 24% of electricity from nonhydro renewable sources.
“National power-generation needs, not cross-border or international needs, rule today’s European model. Domestic users seek transmission designs that favor domestic consumption. Cross-border transmission capacity has not increased since 2008. “Transmission system operators” (TSOs) with political clout make the situation complex. Their market incentives don’t always align with the interests of society, which would benefit from an optimized EU electricity network.
“Europe is characterized by a multiplicity of electrical price areas and by an imperfect connection between them.”
Managing the “Magic Triangle”
In the EU’s magic triangle of energy source “sustainability, security and price competitiveness,” security refers to protection from disruptions to Europe’s energy imports and…
guarantees of sufficient capacity to meet the EU’s needs. Sustainability means access to green energy, with non-renewable sources serving as backups to fill energy gaps. Distribution of alternative energy sources such as solar and “intermittent” wind power remains a challenge in more remote areas. Competitiveness means giving lowest cost providers access to the market, a balancing act between cheap sources and publicly palatable infrastructure costs.
“Most energy infrastructure in Europe is provided at member state level and is funded through a ‘regulated asset base’ model.”
Electrical industry economies of scale encourage larger markets that lower costs and provide competitive services. But customers’ different needs create higher costs for electric companies. Suppliers could save…
save by sharing cross-border, cost-efficient electrical capacity to supplement costlier generation elsewhere. Cheap wind power from one nation could replace expensive gas turbine power in another. When this synthesis occurs in the existing market, the result is “static efficiency”; a new project that improves performance and cuts costs has “dynamic efficiency.”
Importing and exporting electricity is not new: European cross-border redistribution began as early as the winter of 1921-1922, when France’s coal plants supplied electricity via Switzerland to Italy. France and Switzerland developed energy-sharing arrangements, as did Germany and Austria. In the World War II era, many European nations nationalized their energy production. During the 1950s, countries synchronized their…
their electrical systems to improve energy sharing. They eased regulations in 1959 to allow faster development of electricity imports and exports.
“Electricity is not a simple product that is produced, exchanged and consumed.”
By the 1990s, it became evident that “national monopolies exchanging electricity on a bilateral basis” had little motivation to deliver cheap electricity and good service. Local providers prioritized the internal concerns of their individual nations above regional needs for less expensive energy in the EU.
“One aspect of sustainability is the provision of the network required for the integration of sustainable energy sources, in particular renewables.”
The EU tried to stimulate competition within and among member nations so low-cost providers could…
export electricity to higher-cost distributors. Competing to find the most efficient alternatives saves money and benefits everyone. More competition among national providers lowers prices, increases production and leads to better production controls.
In the Nordic market, Sweden has posted a 15% increase in electricity production since 1996 while simultaneously reducing its generating capacity. The European electricity industry’s yearly revenue, €420 billion, contributes about 3% of European GDP. At that scale, any savings benefit all constituents. “In a truly European electricity market,” the EU’s 27 members could realize payroll savings of €11 billion and reduce systemwide costs by €6 billion. An “organized market design” would result in about €700 million annually in efficiency…
Studies on what the EU will have to invest in infrastructure differ dramatically in their results and assumptions. One report, the European Commission’s Energy Roadmap 2050, found that expenditures could reach up to €2,195 billion for building a new pan-European grid structure between 2030 and 2050. Another analysis has Germany spending more than other nations on infrastructure – €30.1 billion over the next decade. It also calls for extending the European transmission network by 17%.
“Common sense would indeed suggest that in competitive markets the average price of two market zones will be equal or lower when they are coupled than when they are separate.”
Improved cross-border coordination could reduce generation and transmission costs by up to 56% through greater system…
Has this Cadre ever heard of investing in renewable energy (solar) as an alternative source of cheap energy to prevent unnecessary increases? Anyway, I guess that declined IMF loan shall slowly open Zambia’s economic deficits gap and expose our cadres ability to respond positively
efficiencies and better peak demand management. But assumptions about very changeable circumstances and inaccurate projections create the risk of a costly downside to grid-system revamping: Spain increased its electric transmission expenditures 18% from 2008 to 2010. The upgrade proved to be an unneeded cost that will burden Spanish taxpayers for decades.
Not a Simple Situation
A single internal market has two “main building blocks”: its market design and its physical infrastructure. In market design, the value of an electricity service depends on the volume of power produced, its location, delivery speed, system stability, adequate supply, carbon content and problems associated with new technology applications. These factors vary and have different remuneration schemes at different…
“Europe is characterized by a multiplicity of electrical price areas and by an imperfect connection between them.”
Managing the “Magic Triangle”
In the EU’s magic triangle of energy source “sustainability, security and price competitiveness,” security refers to protection from disruptions to Europe’s energy imports and guarantees of sufficient capacity to meet the EU’s needs. Sustainability means access to green energy, with non-renewable sources serving as backups to fill energy gaps. Distribution of alternative energy sources such as solar and “intermittent” wind power remains a challenge in more remote areas. Competitiveness means giving lowest cost providers access to the market, a balancing act between cheap sources and publicly palatable infrastructure costs.
“Most energy…
infrastructure in Europe is provided at member state level and is funded through a ‘regulated asset base’ model.”
Electrical industry economies of scale encourage larger markets that lower costs and provide competitive services. But customers’ different needs create higher costs for electric companies. Suppliers could save by sharing cross-border, cost-efficient electrical capacity to supplement costlier generation elsewhere. Cheap wind power from one nation could replace expensive gas turbine power in another. When this synthesis occurs in the existing market, the result is “static efficiency”; a new project that improves performance and cuts costs has “dynamic efficiency.”
Importing and exporting electricity is not new: European cross-border redistribution began as early as the…
the winter of 1921-1922, when France’s coal plants supplied electricity via Switzerland to Italy. France and Switzerland developed energy-sharing arrangements, as did Germany and Austria. In the World War II era, many European nations nationalized their energy production. During the 1950s, countries synchronized their electrical systems to improve energy sharing. They eased regulations in 1959 to allow faster development of electricity imports and exports.
“Electricity is not a simple product that is produced, exchanged and consumed.”
By the 1990s, it became evident that “national monopolies exchanging electricity on a bilateral basis” had little motivation to deliver cheap electricity and good service. Local providers prioritized the internal concerns of their individual nations…
above regional needs for less expensive energy in the EU.
“One aspect of sustainability is the provision of the network required for the integration of sustainable energy sources, in particular renewables.”
The EU tried to stimulate competition within and among member nations so low-cost providers could export electricity to higher-cost distributors. Competing to find the most efficient alternatives saves money and benefits everyone. More competition among national providers lowers prices, increases production and leads to better production controls.
In the Nordic market, Sweden has posted a 15% increase in electricity production since 1996 while simultaneously reducing its generating capacity. The European electricity industry’s yearly revenue, €420 billion, contributes about 3%…
of European GDP. At that scale, any savings benefit all constituents. “In a truly European electricity market,” the EU’s 27 members could realize payroll savings of €11 billion and reduce systemwide costs by €6 billion. An “organized market design” would result in about €700 million annually in efficiency gains; however, projected savings would vary widely by country.
“More competition in theory leads to increased production and lower prices and creates incentive for more efficient operation and investment.”
The Case for “Public Intervention”
The EU can’t expect a unified energy market to “self-organize.” Public intervention is needed because:
“Several empirical studies focus on the efficiencies brought about by increasing competition in the energy markets.”
1.“Energy…
networks are natural monopolies” – As a counterbalance, regulators set prices and controls that indirectly motivate energy providers to “produce socially desirable results.”
2.“Externalities” – Because of the complexity and “system nature” of electricity networks, actions by one region’s regulated utility can have economic side effects on providers and users outside of its service area. A change in one element can create a need for other system adjustments. Those issues require an overarching authority that allocates changes and costs fairly. For instance, adding a new transmission line may require capacity changes to prevent system overload. More demand coupled with better management and coordination can improve the overall system’s operational capabilities.
3.“Harmonizing rules”…
– Energy transmission among facilities in 30 distinct and incompatible markets requires sophisticated transfer “interfaces.” An outside authority must balance the competing interests of TSOs, investors, generators and power storage operators – whose concerns vary by region and by season. Storage operators prefer volatile prices since they store energy for peak seasons or heavy use periods. Electricity-generating firms seek to limit the import of cheap electricity, even as customers prefer it.
4.“National energy policies” – Inertia and politics support the status quo in energy production. Countries tend to advance policies that support their energy picture; for example, nations with nuclear power plants enact rules that favor related technologies like hydro-storage. Some low-cost…
energy states may restrict energy exports to keep domestic prices low. Other nations may export energy with less heed to domestic consequences. Nations exercise their energy policies for political purposes, so relinquishing any control in favor of regional cooperation is counterintuitive. Another challenge arises when political concerns drive investment in internal infrastructure.
Infrastructure Investment
Modifying transmission networks costs more than building new energy-carrying facilities. Expanding these networks allows alternative energy sources to join established coal or nuclear grids. Optimizing the energy infrastructure benefits local power markets, minimizes systemwide losses, drives down energy prices and helps EU member nations.
“Evidence suggests that adopting an…
Jonathan afunta mwikateni uyo kikiki he has gone crazy like terrible
YOU CAN RESEARCH ON THE GLOBAL ENERGY MARKETS INCLUDING THE KEY DEVELOPMENTS AND TRENDS IN AFRICA AND SAPP IN PARTICULAR THE DEVELOPMENTS IS TOWARDS REDUCED AND EFFECIENT ENERGY TECHNOLOGIES
FOR THE SPACE AND RESPECT OF OWNERS I WILL NOT CONTINUE BUT I THINK THE MINISTER SHOULD RESPECT ERB AND SUPPORT ZESCO TO SUSTAINABLY INCREASE THE TARIFFS WE KNOW PEOPLE ARE THE ISSUE AND NEED TO PUT FOOD ON THE TABLE AND IF RESTRUCTURED TO FIT IN THE ZESCO EUROPE MANY WILL BE FARMERS AS TARIFFS ALONE MAY NOT PROVIDE THAT REVENUES
You can tax the public all you want but as long as you keep on spending money in the wrong places, you will never solve this puzzle. We need to figure out where we are going wrong as a nation
this so called cost reflective tariff is a mirage because all the efficiencies,the employees free power, the high administrative are lamped on the consumer. Today if zesco 200 % increment, they will come back next year with a new proposal because their costs would have gone up again. I challenge zesco to break down this cost so that we see what contains. The best model is target costing not this cost plus model in morden business. Look at cocacola, their price per bottle is almost static because the work on their costs to keep the price down.
meant inefficiencies
On behalf of the party and in my own behalf we congratulate Emmanuel Marcon on his election as President we also applaude Francois Hollande for not tracking a vengful route once EM walked off to form his party. We also coup de choupe to Le Pen for graciously conceeding defeat and allowing france to move on
Can the Hon Minister confirm that loadshedding will not continue later this year when the rains have stopped.
What steps were taken to stop loadshedding and how the increase in tarriffs will stop loadshedding.
If this $500 million is recouped it appears that this just covers cost of current generation. What is in place to increase future generation and where are all the investors that were queing up to invest in the energy sector as continually announced by Hon Mutati
What mechanism is in place to protect those in compounds on prepaid meters. How do you ascertain their usage to be below the threshold when they are buy 50,150 kwacha at a time
LT whybis ut than when there is a contoversial topic do u bring in jonathon with post after post not addressing anything just taking up space so that nobody is interested in the blog anymore.
Jonathon if you are not there just for LT dont try to present yourself as an intellectual because what you are avtually doing is making yourself look silly
Length of writing doesn’t mean understanding of a topic. Sometimes quit while your ahead
sorry to be another jonathon, , statement says that it will affect those using more than 300 units.
what is a unit is it kilowatts is it kilowatts per day, month ,year please be more definitative so that when it is introduced their is no ambiguity
The minister should not compare the tariffs with other countries because income differ. Where are the economists to defend us on this? I learnt from simple economics that infrastructure development especially in rural areas is best done by the Government because investors will look for profits and not improving the standard of living of people in these areas. The same way the Government found money to do up the roads is the same way they should look for money otherwise they will be putting the final nails on our coffins. We simply won’t afford it
In addition thermal energy is the cheapest and we have vast expanses of water, whereas countries like Botswana that he wants to compare us with is a desert
Zesco has over employed and at the same time overpays.Reduce salaries
Bwana Mabumba, you’re asking us to support what we don’t understand. Provide more information. Zesco doesn’t publish its Financial Statements, it’s difficult to tell what its performance is. You have used our neighbour’s figures without asking how they arrived at that cost. What’s wrong in having the lowest electricity tariff in the region? One would think that’s what will make us attractive. When are you going to address the issue of cheap power to bulk consumers like the mines? How will this increment help Zesco?
Ba Mabumba its not your money used for subsidies. Its our money its Zambian tax payers money. Its the only opportunity a poor Zambian can enjoy his country.
THE IPA COST OF SERVICE FOR ZESCO IS NOT RELEVANT AS BASIS FOR TARIFF INCREAMENT
ITS RESEARCH OBJECTIVITY WAS MEANT TO RESTRUCTURE THE COST OF INTERNAL ZESCO OPERATIONS AND NEVER FORWARD LOOKING IT HAD IN MIND TO PRIVATISE ZESCO AND WAS MEANT TO UNDERSTAND THE ZESCO INTERNAL COSTS AND HAD NOT EMPHASISED LCOE IN ITS ANALYSIS
ITS POORLY ANALYSED AND ZESCO AND ERB SHOULD PICK ON AND HAVE A NEW RELEVANT INDUSTRIAL WIDE COST OF STUDY
MY ADVICE FOR THE IS TO PAUSE AND CHECK HIS COMMENTS TO ENSURE THEY ARE BASIS AND FACTUAL
THE ZAMBIAN POWER MARKET STRUCTUAL NEED TO DEVELOP AND YOU MAY TAKE A GRADUAL APPROACH
THE COST OF SERVICE STUDY BY…
IPA DONE ON ZESCO AFTER THE SWEEDISH ONE IS NOT RELEVANT FOR TARIFF AND FOR ZESCO
ZESCO AND ERB ARE ON TRACK TO APPOINT A NEW STUDY TOGETHER WITH AN IMPACT ASSESSMENT
FOR THOSE PROFESSIONALS WHO KNOW THE STRUCTURE OF ULTILITILIES AND MARKETS THEY WILL SEE THROUGH YOU WILL NOT INCREASE TARIFFS BY 30% ITS NOT SUSTAINABLE I HAVE SHARED WITH PRMC AND ERB AND ZESCO THEMSELVES THEY UNDERSTAND THANKS
DEVELOPMENTS OF OTHER GAS AND THERMAL PLANTS ELSEWHERE WILL SEND THE ZESCO REVENUE MODEL DOWNWARDS ESPECIALLY TANZANIA AND MOZAMBIQUE INCLUDING THE INGA THAT WILL MOP UP THE DEFICITS (SUPPLY 20%) OF AFRICA INSTALLED CAPACITY TO MARKETS SUCH AS WEST AFRICA AND SOUTH YOU NEED TO FLEX YOUR MEGA INVESTMENTS AND SEE THE LONGTERM OPTIONS ESPECIALLY IN THE FIANNCING METHODS YOU CANNOT CALL TELL THE MINISTER STARIGHT FACE THAT HE NEEDS TO CHECK HIS ANALYSIS AND COMMENTS BEFORE THAT WILL BE UNWISE BUT I AM SURE HE HAS BEEN ADVISED AND POINTED TO WE HAVE ANALYSED ZESCO AND ULTILITIES IN AFRICA AND GLOBAL AND KNOW THE IMPACTING TO 2050 ITS SUPPOSED TO BE GRADUAL OTHERWISE IN…
SUBSIDY REMOVAL TO CREATE FISCAL SPACE OTHERWISE THE EASIER OPTION IS TO LAY OFF ZESCO WORKERS AND TRY TO BUILD A BUSINESS CASE THAT MAY NOT BE CORRECT GROW THE BUSINESS AND ENERGY MIX AND PROMOTE LCOE ESPECIALLY FOR YOUR IPPAS POWER PURCHASES
THE EU IS THE MODEL OF DEVELOPED INTERCONNECTORS AND ENERGY MARKETS AND IF THE SAPP BECOMES INTERCONNECTED AND INTEROPERATIVITY WITH TRADES ABOVE 70% IN REGIONAL POWER THE COST OF POWER WILL EVEN FALL MORE MAKING THE ZESCO CASE IN COSTS EXEMPLIFIED AS IT MAY BE CHEAPER TO IMPORT POWER THAN LOCAL BUT ENERGY SECURITY IS THE ISSUE ALSO THE MINISTER SHOULD
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Make the capital portfolio a priority
Capital-investment performance can have an enormous impact on an organization’s value, and it can drive growth and increase overall returns on invested capital. The best companies use a clear capital-allocation strategy to build winning portfolios. They link strategic imperatives to a target capital portfolio, setting and communicating targets for growth and productivity improvements and for sustaining capital expenditures.
For example, when a leading utility generated an integrated view of its capital portfolio, it found that a large share of projects were classified as “regulatory,” skewing the portfolio from its optimal mix. As a result, the portfolio overweighted investments that offered little, if any, cash returns or enhancements of…
operational stability. With this insight, managers reevaluated the portfolio, project by project, and removed discretionary elements that were bundled into the regulatory requirements. By freeing capital this way, they had more to spend on other cash-generative priorities, such as increasing network reliability
I AM NOT A POLITICIAN I AM JUST PROFESSIONALLY CORRECT AND HAVE COMFIRMED MY FINDINGS OKAY THANKS COMMENT ON THE TOPIC AND LETS DISCUSS IT//
THE IMPACT OF TARIFF INCREAMENT ON HOUSEHOLDS AND COMMERCIALS WILL BE HIGHER THAN NORMAL ASKING ZAMBIANS TO PAY FOR ZESCO CAPITAL EXPANSIONS WITHOUT GOVERNMENT SUPPORT IS NOT SUSTAINABLE FOR NOW AND THE FUTURE AS MOST MAY NOT AFFORD TO PAY FOR MORE THEN 300 UP TO 450 UNITS OF CONSUMPTION MANY WILL DEFAULT AND FAIL TO SERVICE ZESCO
THE CASE OF IPP SHOULD BE WITHIN LCOE YOU MAY SUPPORT IPPS BUT AT APPROPRIATE COSTS YOU MAY PRIOTISE EQUIPMENT REPLACEMENT AND ASK FOR GOVERNMENT GUARANTEES AND SUPPORT FOR YOUR DEBT SERVICING AND THOSE CRITICAL PRIOTISED PORTIFOLIO OF PROJECTS TO ENSURE YOU GROW YOUR BASE LOAD,SUPPORT THE STABILITY IN TERMS OF ECONOMICS OF…
OF ZESCO WHILST PROTECTING THE DISTABILISING EFFECTS OF DISRUPTIONS THAT CAN COME WITH POTENTIALLY DAMAGING PRICE RISES A MULTI YEAR APPROACH OF 15-20 % MAY EVEN BE BETTER AS YOU PROTECT AND PRESERVE YOUR EQUITY STAKE