Energy Expert Jonstone Chikwanda says non-cost reflective tariffs is one of the issues that has held captive the development of the energy sector.
Mr Chikwanda explained that it was seen in oth the 7th and 8th National Development Plan that the government wanted to migrate to cost reflective tariffs and the New Dawn Government has also been very strong on the issue of migrating to cost reflective tariffs because when the tariffs are cost reflective then they will be able to attract the investment that is needed in the sector.
“The price must be correct first because if the price is not correct then you will not get the investment that you need, that is where the problem has been, the apex issue we have been seating with and anywhere you have seen greater investment it is because they got their tariff correct and in this particular case we have continuously relied on ZESCO, even the independent power producers that have been producing their expensive power at the correct price have been selling to ZESCO who in turn has to go and sale it at a loss, numbers do not lie as today ZESCO is owing 1.3 billion Dollars to the independent power producers and this money has to be paid by the taxpayers in one way or another,” he mentioned
“This is the dilemma that we have been seating with as a country and we need to approach this thing candidly and deal with the people, announce to the people, reason with the people and different types of customer demographics as you know that there are different customers that go there it’s not just the most vulnerable that are cascading to being consumers of power,” he added
Mr Chikwanda explained that the current energy crisis is as a result of a culmination of certain inabilities that we found ourselves in as a country in the past, adding that the energy sector reforms need to be taken to a higher level and accelerate them by attracting a significant investment in the energy sector far and above just receiving pledges.
“We would get alot of pledges at the Zambia Development Agency – ZDA in billions but they were not being actualised because of the market condition,” he said
And when commenting on the announcement on fuel pump price that will be announced by the Energy Regulation Board – ERB today, Mr Chikwanda stated that ERB looks at the performance of the Kwacha against the United States Dollar at the beginning and closing of the month before arriving at a decision, adding that his expectation is that the chances are quite high for the prices of fuel to have an upward adjustment, as there has been an erratic supply especially of petrol which is mainly because of the oil marketing companies which have been struggling to land the commodity at a viable price.
He noted that the fuel monthly reviews is because of how the market is configured and generally Zambia was the only country that was not reviewing the prices on a monthly basis as the entire region has been revising the prices on a monthly basis.
“For us mainly is because we had a refinery in those days in Ndola which used to give us a space of about 60 days which used to take longer when you have a ship load by the time we exhaust and get another one, it would be about 60 days so, now that the refinery is not operational anymore, the oil marketing companies just buy from open markets and quotations are valid for 7 days, hence, the most realistic approach is to revise the prices on a monthly basis in order to ensure that if there is a benefit that is accrued to the people it does not evaporate by the time the review cycle comes,” he said
Mr Chikwanda cited that the challenging part in these monthly reviews is the global instability, if all things being equal when the markets are stable and having a currency that is performing better the chances are that there can be spells of no price change.
“You can go 2 to 3 months with stable prices and sometimes have moments when the price will go up, and it’s not all the time that the price has to be building up,” he said