There has been a public outcry over fuel and electricity hikes announced by ERB. The PF government is cognisant of the impact the price hikes will have on the consumer and the economy at large. The depth of challenges in the energy sector can not be overemphasized and should not be politicized.
In order to guarantee self-sustainability in the energy sector, the government has adopted a non-subsidy but the cost-reflective approach in running ZESCO and other parastatal entities. The reliance on subsidies has put pressure on Treasury and indirectly the economy as resources meant for socioeconomic development were being channeled to subsidize costs.
In order to have a cost-reflective electricity regimen, ZESCO needs to increase its tariff. This, in turn, will open up the sector’ to more investment and subsequently lower rates.
The tariff hike by ZESCO is meant to among other things cover operation and maintenance costs, taxes, improve generation and distribution and cover inflation pressure.
On the bright side, ZESCO has scrapped off it’s monthly fixed charges and reduced the 100-200kwh tariff from 0.89 to 0.85 kwacha for residential consumers.
The increase in fuel pump prices, has been necessitated by a weak kwacha at the time of importing the stock in October 2019. To mitigate the risk of loss, prices had to be adjusted upwards. The kwacha has been gaining against major foreign currencies and is expected to continue strengthening but the public must bear in mind the exchange rate which was obtained in October is key to the selling price of the stock obtained at that time.
Other factors affecting the price of fuel are the middlemen or transporters and oil marketing companies as well as the Tazama/Indeni facilities whose facilities are due for upgrades.
Going forward, the upgrading of Tazama oil pipeline to channel refined products such as diesel and petrol will result in reduced prices as the cost of transporting these products by road will be eliminated. Upgrading Indeni will also result in increased output and ability to process different types of crude oil even from neighboring countries such as Angola.
The government has also made it policy to have 30% of fuel on the market from clean and green sources. Biofuel from crops sub as hemp, cassava and sugarcane is being encouraged as a mitigate to the challenges.
Load shedding will soon be in the archives with the coming online of Kafue gorge lower hydropower station adding 750mw to the national grid beginning first quarter of 2020, Lusiwasi upper and lower with 15 and 85 megawatts respectively, Kabompo gorge CEC project with 40mw, GetFit solar project with 120mw, El Sawedi & Toyota Tsusho 100mw solar farms in western province, Universe 200mw solar project (135mw in Northern province and 65mw on the Copperbelt) as well as phase 2 with 300mw at Maamba power station.