The Kariba North Bank Power Station (KNBP), the largest source of Zambia’s hydroelectricity generation, is set to shut down in September due to excessively low water levels in the dam reservoir, the Energy Regulation Board (ERB) has disclosed.
And the ERB has called for an emergency public consultation meeting on August 21 to collect the public’s views on ZESCO Limited’s application for emergency power tariff adjustments for residential, which will result in some reductions and increases of between 50% to 156%.
The ERB stated that in April, it declared ZESCO’s inability to meet the country’s electricity demand due to the drought as an emergency, subsequent to which ZESCO applied for emergency tariff adjustments for its residential, commercial, and maximum demand customers.
ZESCO has proposed to expand the residential tariff bands from the current four to six and keep unchanged all residential consumption of 200 units and below (bands R1 and R2) at 44 ngwee (K0.44) and K1.05 respectively. Consumption above 200 units up to 400 units may go up by 50% from K1.05 to K1.58 and K1.69 to K2.54 respectively, if the proposed tariffs are approved.
The proposed new band R5 will be charged at K2.96/kilowatt-hour (kWh) while the highest band, R6 – also new – will fetch K6.25, attracting the highest percentage increase of 156%.
In his update on the national power situation on August 17, the Minister of Energy Makozo Chikote warned that ZESCO’s financial situation could be sustained through the current tariffs because it imports power at much higher tariffs than it sells locally.
Chikote said ZESCO imported power at an average of 12.6 US cents/kWh and sold it in Zambia at 4.1 cents/kWh. “If you were to do business [like this], already you should know that you must close because you can see the gap. You go and order a shirt at $2,000 and you come and sell it at $500. This is what is happening currently with ZESCO.”
According to the ERB public notice, ZESCO is seeking an emergency tariff to raise US$14 million from residential customers urgently needed to import 300MW of electricity from South Africa (70MW) and Mozambique (50MW), and to deploy in-land diesel generators (180MW).
Another US$37 million will come from non-retail customers on power purchase agreements, essentially bulk power users such as the mines and other industrial operations, while the balance of US$17 million will come from ZESCO’s own funds.
ZESCO proposes to reduce the tariff for small businesses such as hair salons, barbershops, grocery stores, and the like whose consumption is equal to or less than 100 units, who would pay 21% less from 78 ngwee (K0.78) to 64 ngwee (K0.64); while maintaining the current charges for next two bands of up to 500 units. Consumption above 500 units would be increased by 38% from K2.28/kWh to K3.15/kWh.
“The impact is a 3% reduction in tariffs for low-consumption consumers and an increase by up to 38% for high-consumption customers.”
Maximum demand customers who include manufacturers, farmers, and shopping malls could see their tariffs go up by a maximum of 143%.
According to the ERB, the proposal seeks to maintain the current tariffs for 70% of the total electricity consumed by this user category in a month and increase tariffs for 30% of the total electricity consumed in a month.
“The proposal results in an increase in tariffs by 50% – 143%. However, customers with existing and active partial Emergency Power Supply Agreements (PSAs) with ZESCO will not be subjected to the emergency tariff changes.”
The imminent shutdown of the Kariba North Bank Power Station (KNBP) in September, the largest source of Zambia’s power generation, will impact ZESCO’s ability to generate electricity even more, plunging the country into a deeper electricity crisis. Added to that, Maamba’s coal plant is due to shut down for maintenance in September, taking out a further 135MW.
Consequently, Chikote announced extended hours of load shedding of 17 hours daily from September 1.
The ERB explained that while not legally bound to call for public comments during an emergency, it had nonetheless called for an urgent public hearing to discuss the proposed tariff hikes, which ZESCO hopes will help to mitigate the dire electricity shortage in the country.
“This Public Notice and Consultation Paper (PCP) is issued in the interest of best regulatory practice and in keeping with the ERB’s mission to be responsive to stakeholders’ needs and to ensure transparency with regard to the emergency situation and the efforts to manage the energy crisis,” read the statement.
The Kariba Dam is reported to have only 10 percent of usable water left. For months, ZESCO has been warning of the power plant’s possible shutdown as the water levels in the Kariba Dam continue to drop.
KNBP will be the second major hydroelectric facility to shut down after Itezhi-Tezhi Power Corporation (IPC), announced it had shut down one of its two turbines because of drastic low water levels, which dropped below the minimum required to adequately generate electricity.
ZESCO has also commenced disconnections of communities on grids dedicated to critical installations and facilities that are not targeted for load management.
“We are now separating the lines and putting the dedicated lines to critical installation, we are looking at alternative sources of power and thinking of putting up solar and diesel gen-sets in the meantime,” said ZESCO spokesperson Matongo Maumbi.
ERB says the new tariffs seek to replace the power that will be lost when KNBPS shuts down and Maamba undertakes scheduled maintenance. The tariff increases are also a measure to channel power to productive sectors of the economy and to compel domestic users to switch to other forms of energy such as solar and gas for lighting, cooking, and heating.
Zambia is facing one of the worst droughts in over two decades following El Nino weather last rainy season, which has severely impacted hydroelectricity generation, led to widespread crop failure, and threatened six million people with hunger. Zambia’s energy is largely hydro driven.
In February, the government declared the drought a national disaster and launched an emergency food aid appeal in April to which several foreign governments and international development agencies are responding.
