Lusaka, October 15, 2019
Earlier today the Energy Regulation Board released a press statement indicating that they have concluded the procurement process of a consultant for the Cost of Service Study. While this is indeed commendable, CUTS is concerned by the length of time it has taken to conclude this process. Indeed, stakeholders have been awaiting the Cost of Service Study since it was first announced by the Minister of Finance in 2017 during the 2018 National Budget Address.
While it is imperative that the ERB ensure that diligence be exercised in completing this task, we urge the ERB to ensure that it be completed in an expeditious manner. Given the current energy crisis that the country is facing, the importance of this study cannot be over-stated. It is imperative that a study that outlines the true cost of electricity be completed at the soonest to ensure that consumers only pay the true cost of their use of electricity. Consumers cannot be expected to carry the brunt of the cost of inefficiencies that exist within ZESCO as well as the subsidies that are being provided to private companies such as the mines.
It is important to note that while there has been much discussion lately regarding the current status of load shedding, a significant amount of the population does not have access to electricity at all. It is this marginalised population that remains most in need of electricity and thus necessitate the cost of service study so as to ensure that these consumers can also have access to electricity. Indeed, according to statistics, only 30 percent of the population has access to electricity and in the rural areas, we see that this figure drops drastically to five percent of the rural population having access to electricity. The Cost of Service study will therefore be cardinal in outlining what kind of cost structure is necessary to ensure that we have increased electricity access in Zambia for all consumers.
As we await the results of the Cost of Service Study, we reiterate that the ERB should refrain from implementing electricity tariff hikes in the absence of these results. Indeed, according to the statement issued on 10 May 2017, the ERB indicated that the next tariff increases would be undertaken on the basis of the Cost of Service Study. In the meantime we urge ZESCO to undertake reforms within the institution to minimise their costs. Undertaking reforms such as revising the condition on staff tariffs as was noted by the ERB could serve to begin to address some of the concerns being raised by consumers.
In order to address our more immediate challenges it is indeed common knowledge that Zambia is in discussions regarding tariff hikes on imported electricity from South Africa. As we proceed in these discussion it is important that the ERB be as consultative and inclusive as possible. As in the past CUTS will continue monitor the impact of tariff rises on poverty and continue to engage on an incremental and equitable roadmap to moving to cost-reflective tariffs.
By Chenai Mukumba, CUTS Centre Coordinator
For further information please contact: The Centre Coordinator, Consumer Unity and Trust Society (CUTS), House No 32, Plot 406dtrrf, Kudu Road, Kabulonga, Lusaka. Email: email@example.com or phone: 097 8055 293.
The Consumer Unity and Trust Society (CUTS) International, Lusaka in an NGO that was established in 2000 to function as a center for action (policy) research, advocacy and networking on issues of trade and development, competition policy, investment regulation and consumer protection. The mission of the center is to function as a resource, co-ordination, as well as networking center, to promote South-South cooperation on trade and development by involving state and non-state actors (NSAs). CUTS implements four different strategies in its work: Research, Policy Advocacy, Capacity-building and Networking