Maravi

Zesco records 6.9% decline in power sales

Zesco records 6.9% decline in power sales
Written by Kabanda Chulu
Friday, June 26, 2009 3:58:57 PM

ZESCO Limited has recorded a 6.9 per cent decline in power sales to all its major customers due to reduced economic activities from January 2009 to date. And Zesco Limited director of finance Moses Zulu has said the government must provide sovereign guarantees on Zesco’s long term loans since the company requires investments of up to US $6 billion in the next five years.

Appearing before the parliamentary committee on Economic and Labour Affairs on the impact of the global economic meltdown on Zesco’s operations, Zulu companies had continued to scale down production due to reduced economic activities, thereby reducing power consumption.

“This decline is as a result of the global economic crisis forcing our major customers including the mines reducing their electricity consumption,” Zulu said. “And power sales to major customer categories have declined by 6.9 per cent hence creating challenges not only for Zesco but for the entire energy sector.”

And Zulu said Zesco required large sums of money for its various infrastructure projects.

He said the required resources were too large to be sourced from the local markets but would have to be sourced from the international capital markets.

Zulu explained that it would be difficult to source funds from the international capital markets since there were the sources of the global crisis and had since imposed strict lending conditions and giving priority to domestic markets in order to stimulate their respective economies.

He also said the rise in both domestic and international lending rates would increase Zescoís cost of servicing its debts.

“We are currently on a drive to develop new generation and transmission projects and in the next five years, we need investments amounting to US $6 billion and borrowing such large sums of money at higher interest rates than previously projected will put pressure on the Zesco balance sheet and such cost increases cannot be passed on to customers in terms of tariff increases,” said Zulu.

“So government must reconsider the issue of providing sovereign guarantees on Zesco’s long-term loans since sovereign guarantees will not only make it easier to source for the required funds but will also make it cheaper with better conditions.”

Labels: ECONOMY, MOSES ZULU, ZESCO

posted by MrK @ 2:56 PM