Message Ven 16 Nov 2012 11:23


The International Monetary Fund (IMF) has called for a renegotiation of electricity bulk-sale agreements between the Zambia Electricity Supply Corporation (Zesco) and mining companies operating in the mining-dependent Southern African country.
The IMF says the current tariffs are unsustainable and are unable to support the expanded power supply that Zambian mines require.
In a report, ‘Zambia – Selected Issues’, the IMF notes that mining companies are ready to discuss revised terms and are prepared to form a consortium that would fin-ance, build and operate new power plants.
The IMF indicates that, over the medium term, a potential power shortage could become an obstacle to the continued growth of Zambia’s mining, agriculture, and manufacturing sectors, all of which require increased electricity supplies.
It reiterates the need to hike electricity tariffs to a level that will support financing the required investment in expanded generation, transmission and distribution capacity.
But it warns that, even if it increases tariffs, Zesco will still find it difficult to raise the necessary financing for investment because of its record and a weak balance sheet.
However, the fund says that, given the extent of the tariff increases required, the increases should be phased in over an extended period to lessen the impact on customers.
Zesco has indicated that it has started renegotiating the tariffs with the mining companies.
MD Rodnie Sisala says the tariffs paid by all electricity customers in Zambia are “very low”, hence, the proposed increase.
Zesco, through Copperbelt Energy Corporation (CEC), supplies 50% of the power used by the mines.
Since 1997, Zesco has had a bulk supply agreement with CEC that is due to come to an end in 2020.
This agreement requires CEC to buy electricity for onward transmission to its customers, the mining companies.