Maravi

ZESCO’s tariff hike will increase poverty in households – Prof Saasa

ZESCO’s tariff hike will increase poverty in households – Prof Saasa
Written by Nchima Nchito Jr
Tuesday, July 21, 2009 6:38:20 PM

ECONOMIC consultant Professor Oliver Saasa has warned that the 40 per cent increment revised electricity tariffs on residential consumers given to Zesco Limited might lead to an increase in poverty levels.

Energy Regulation Board (ERB) awarded the increment in two phases, in the first phase between 2009 and 2010 there will be an increment of 40 per cent which is effective August 1. The second phase, an additional 33 per cent will be effected for the period 2010 to 2011 in essence bringing the total increment to 73 per cent for home or residential consumption.

On average, Zesco got a 35 percent increment for the period 2009 to 2010 from their proposed 66 per cent increment in the 2009 financial year. But ERB would thereafter effect a further 26 per cent increment for the period 2010 to 2011.

In an interview, Prof Saasa said the current economic circumstances had to be taken into consideration.

“The effects of this increment on the poor will be quite significant. With the revised tariffs most people would have to pay more than they can budget for,” he said “this will mean that expenditure in other products will also have to be reduced in most home budgets to accommodate the tariff hikes”

Prof Saasa cautioned that there were also other hidden costs to the revised electricity tariffs.

“The majority of people will be forced to cut down on their consumption of electricity turning to charcoal as an alternative source of energy. With this happening it will have an adverse effect on our forest conservation plans as there will be a hike in the demand for charcoal” he said.

Prof Saasa said while bringing economic gains to Zesco, this would greatly compromise conservation efforts.

He, however, commended ERB for introducing the revised electricity tariffs in two phases as this would reduce shocks to the economy.

And Zambia Chamber of Small and Medium Business Association (ZCSMBA) have called for an improvement on the services offered by Zesco.

Commenting on ERB’s approval of an increment of tariffs by Zesco, organisation president Maxwell Sichula said the move was expected.

“It is understood that the sector has to be made more attractive if it is to attract more investments though the cost of business will also go up,” said Sichula. “However, with this increase in tariff we expect that there shall be improvements in the operations of Zesco.”

Sichula said as things stood, Zesco provided services that where below standards.

“Our people are suffering with the erratic supply of power that we are currently experiencing in the country. Should Zesco fail to account for the increased revenues they will have from the revised tariffs, we expect that heads will roll,” he said.

Asked on the fact that with revised tariffs commercial power users will pay less than residential users per Kilo Watt/ Hour, Sichula said this might have been done to encourage the industrial sector.

“…..we all know that for the economy to grow, we need to encourage the industrial sector. This might have been the motive behind the pricing,” said Sichula.

Labels: OLIVER SAASA, ZESCO

posted by MrK @ 5:38 PM