…Mining, industrial, and export market customers pay higher tariffs
ZESCO Limited (ZESCO) has disclosed that domestic consumers, who account for 29% of the company’s revenue, are heavily subsidized by its mining and industrial customers.
Contrary to the long-held perception by many people in Zambia, Managing Director Victor Mapani has explained that ZESCO’s average electricity production cost is between 6.8 to 7 cents per kilowatt-hour (kWh) whereas domestic customers buy electricity at an average of 4 cents/kWh.
He said the loss ZESCO incurs on servicing its domestic clients is diluted and covered by the remainder of its customer base comprising industrial, mining, and exports.
He explained that from this perspective, if the entire retail customer complement adopted solar or other alternatives and moved off the electric grid to become prosumers (consumers who also generate power), ZESCO would make more money from them selling their excess power to it than it does supplying power to them because ZESCO was not only interested in making profits but wanted people [its customers] to have a comfortable life.
This he said, was among the reasons ZESCO was encouraging the adoption of alternative power sources. “That’s why we are encouraging them to [go off the grid to produce and] feed into the grid because we need more power.”
“We will make a profit because you will give [sell] it to us at a reasonable price and it is better because it [power] won’t go off when ZESCO power goes off so we are encouraging you to go off the grid,” he advised the audience.
Mapani said this against a backdrop of attacks on the utility’s mass campaign to move consumers off its electric grid to save power or make more power available to the productive sectors, with many citizens deriding ZESCO for becoming “an agent of solar companies and equipment suppliers which will find itself without customers.”
But Mapani contended that contrary to those assertions, the country needed more power because the mines and other industries were growing.
Further, he said psyching consumers to shift their power usage habits and adopt alternatives to grid power were among the short-term crisis response measures ZESCO had adopted.
Since power rationing commenced on 11 March 2024 in response to the power crisis induced by drastically reduced rainfall in the power generation reservoirs as a result of the drought, ZESCO has curtailed power from the initial eight hours daily to emergency cuts which run into days for many household customers.
While the impact of this load management on the economy is still unfolding, it will undoubtedly surpass any record in similar circumstances.
The last bad episode in 2018/1019 resulted in an economic growth shave of about 20% according to some studies. Compared to the current situation, one might term 2018/19 decent because it was not as bad. Zambia’s GDP growth projections were cut from 4.7% to 2.3% early on in the year.
