Experts challenge govt to quickly invest in Zesco

Experts challenge govt to quickly invest in Zesco
Written by Kabanda Chulu
Monday, June 08, 2009 2:46:40 PM

ENERGY and financial experts have challenged the government, as a shareholder in Zesco Limited, to quickly invest in the company rather than considering a 66 per cent increase in electricity tariffs across all customers.

The experts have also urged management at Zesco Limited to ëclean up and put its house in orderí through implementation of bold strategies that would turn around the operations of the company in order to provide an efficient and reliable service.

Questions have also arisen about the clarity of the Key Performance Indicators (KPI) framework, which the Energy Regulation Board (ERB) applies when considering the Zesco tariffs.

Currently, staff costs at Zesco account for 50 per cent while distribution costs make up 23 per cent, coupled with lower revenue collections and a large number of unmetered customers.

In view of the above, most Zambians have opposed the proposed 66 per cent increase in electricity tariffs.

Most consumers say a tariff adjustment would only be justified once Zesco becomes consistent and efficient in power supply.

And last week, the Zambia Institute of Chartered Accountants (ZICA) hosted a forum to discuss the impact of the proposed electricity tariffs on consumers and the industry.

During the forum in Lusaka, ENFIN Solutions managing consultant Andrew Kamanga said the government’s unpreparedness about the future of Zesco was sending signals for private sector engagement.

“If Zambia has to become a fully fledged attractive investment destination, she has to develop in all economic sectors and the driver of this development is power and since government is debt free it should actively invest in power generation thereby becoming an exporter in the region. But we need clarity from both government as shareholder and management since the company is being encouraged to go commercialisation but what plans does government have in store as shareholder?” asked Kamanga. “It is true this year, there is a provision of K16.8 billion for completion of rehabilitation projects but we should not even be looking at tariffs since the shareholder is there and it should pump in money. For example, South Africa has invested a lot in ESKOM, which is facing similar challenges as that of Zesco.”

And a consultant, Mutumboi Mundia emphasised the need for Zesco and the ERB to be more transparent in the way information was being provided to the public.

“Full transparency is the only way to achieving optimized solutions in line with Zesco’s vision and the KPIs are a good starting point if strictly monitored but the assessment of February 2009 by the ERB covers the first three quarters of 2008 and does not make mention to any assessments having been done prior to this hence suggesting that none were done before this and yet this is meant to be a quarterly assessment,” said Mundia. “Also the KPI framework does not clearly state what Zesco is being measured against. And what the ERB views as acceptable performance and if there are any embedded sanctions or incentives.”

And ZICA president Chintu Mulendema said Zesco needed a tariff increase but asked to what extent an adjustment would turn around the operations of the power utility.

“It is a good thing and I support it but there need for Zesco to clean up its house and implement strategies that will work to improve efficiency,” said Mulendema.