Energy Expert Johnston Chikwanda says it is very unfortunate that the Copperbelt Energy Corporation and Zesco have failed to reach a mutually acceptable power supply deal.
Mr Chikwanda says it was expected that it was not going to be a smooth separation between these two companies although it was and it still remains possible to resolve their issues.
He said the reported time frame in which the negotiations started was not enough.
Mr Chikwanda said given the intricacies around this two decade old relationship, seven weeks of negotiations were not enough.
He said with Zesco stopping to sell electricity to CEC, CEC’s main income would be from charging Zesco for using CEC’s infrastructure (transmission charges) on the Copperbelt in order to remain viable.
Mr Chikwanda said although there is a thought that CEC could import electricity from the region to supply its many customers, this is not guaranteed due to the lack of adequate electricity in the region and the high cost of importing electricity which is likely to me more than the price at which CEC is currently selling to its long term customers.
“Hence, the most realistic vector which CEC will appear to depend on for survival is to charge transmission charges (transmission tariff/wheeling charges).
Gaining full insight in this transmission charge which is also known as wheeling charge or transmission charge and assessing whether it is realistic or not is a matter for the Energy Regulation Board (ERB) which was not part of the engagements unfortunately”, he said.
Mr Chikwanda chikwanda the ERB still remains the best vehicle to adjudicate over tariffs between its licensees in order to maintain stakeholder harmony among players and ensure a fair return on investment for various licensees adding that both Zesco and CEC are ERB’s licensees.
He said in this case, Zesco is only willing to pay a certain amount of transmission charge so that it is able to sell electricity at a profit to the Copperbelt.
Mr Chikwanda chikwanda the amount Zesco is willing to pay may not be the amount CEC wants to charge in order for it to meet its operational requirements, capital expenditure and a fair return on investment hence the challenge.
He said to make matters even more intricate, CEC will also be charged by Zesco for use of Zesco’s transmission infrastructure should CEC resort to importing electricity from the region in order to service its Copperbelt based customers.
Mr Chikwanda said without an independent body to adjudicate and oversee this kind of state of affairs, this matter will go very far and lead to unnecessary challenges. Because of the way both parties have handled each other, there is no trust between them which makes above board negotiations very difficult.
“This is why ERB must be proposed to examine to what each party wants to charge each other for use of its transmission lines. However, ERB is incapacitated due to inadequacies in the current Energy Regulation Board Act”, he said.
“This is the reason I have maintained that the new Energy Regulation Bill of 2019 and the Electricity Bill of 2019 should have now been enacted in to law by now. These Bills when passed into law will solve a lot vexatious challenges and gaps in the electricity sub sector. As of now, ERB is not legally mandated to intervene and set tariffs with regard to Bulk Supply Agreements between Zesco and its big customers which include CEC”, Mr Chikwanda added.
He has however commended government for showing strong praxis of leadership to ensure continued of electricity supply although it is at terms and conditions which CEC appear to be uncomfortable with.
Mr Chikwanda said for the sake of country and given what we currently going through, CEC shoukd allow the electricity to reach the customers while they ignite alternative measures to resolve the impasse.
He said this is a pure case for an independent body to resolve and the sooner it is resolved, the better.