ZESCO, Zambia’s energy giant has made an application to the Energy Regulation Board – ERB to increase connection fees by about 500% for domestic consumers and to increase connection fees for commercial customers by about 970%.
According to information obtained by the Zambian Business Times – ZBT, ZESCO proposes to increase the connection fees for customers in high density, demarcated and reticulated areas by about 500% from the current K769 to K4,600 for 1 phase overhead, K1, 430 to K15, 300 for 3 phase overhead which is almost an increase of 970% for mostly commercial customers and K890 to K6,800 for 1 phase underground.
The proposed fees for customers in low density, demarcated and reticulated areas have been proposed to increase by about 360% from K2, 873 to K13, 300 for 1 phase overhead standard, K769 to K4, 700 for 1 phase overhead (servant’s quarter), K4, 887 to K28, 800 for 3 phase overhead, K3, 358 to K15, 800 for 1 phase underground and K5, 342 to K34, 300 for 3 phase underground.
The proposed connection fees for customers in un-demarcated high density areas are K1,709 to K7, 000 for 1 phase overhead, K3, 159 to K20, 300 for 3 phase overhead, K2, 124 to K9,000 for 1 phase underground and K3,642 to K24, 600 for 3 phase underground.
ZESCO has indicated its intensions of moving to a cost reflective tariff for both its energy supplies as well as other support services which include connection and service charges. This exercise of revising upwards to cost reflective tariffs in Zambia is a mirage as the companies costs are US dollar linked.
Zambia’s ministry of finance and the central bank – BOZ has opted to adopt a policy of having a free floating currency instead of a managed exchange rate, a situation that leads to the perpetual depreciation of the local unit – the Kwacha, resulting in cost reflective increments almost on a year on year basis. The Regulator ERB is therefore calling for public comments on ZESCO’s application to revise connection fees for 2022.
The Energy Regulation Board received an application from ZESCO Limited to revise connection fees for standard connections. The utility company has applied to revise upwards standard connections related to the three customer categories. The bulk consumers such as mines and export market are made via negotiated deals most of which remain confidential raising suspicion that the largest consumers may be getting a better deal.
Some analyst have challenged ZESCO and the Ministry of Energy to find ways in which Zambians can benefit from its local copper endowments to getting preferential pricing instead of these cost plus prices. Zambia is Africa’s second largest copper producer.
Other’s argue that the country’s level of electrification is still too low and is an indictment on the successive governments which should like other resource rich countries, leverage its large copper reserves to massively electrify the country, and subsidize rural and peri-urban areas electricity connections and supply costs.
