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The Zambian government says high electricity tariffs are frustrating foreign direct investment in the energy sector and needs to be reviewed.

Energy and Water Development Minister Felix Mutati told Xinhua in a recent interview that the 12 percent tariff on commercial electricity was the highest compared to other countries in the southern African region and was hindering investment in the sector.

Mutati said although the state-owned Zambia Electricity Supply Corporation (ZESCO) was striving to meet the supply demands, the high tariffs needed to be reviewed to make the company competitive and attract investment in the sector and further meet the demand in the region.

“The tariffs are relatively high in Zambia when you compare to other countries in the region and we need to review it to attract foreign direct investment in the sector,” the minister told Xinhua.

Mutati said the Zambian government was seeking 2 billion U.S. dollars to overcome the looming blackout in the region in the next four to eight years and this was a serious challenge that needed concerted effort by the government in partnership with the private sector through the Southern African Power Pool, an organization created by Southern African Development Community in August 1995 to expand electricity trade, reduce energy costs and provide greater supply stability in the region.

“We need to join hands and find a solution to the looming power shortage but the question is how to attract the private sector so that the money we require is mobilized,” he said.

About 40 percent of the 11 million Zambians have no access to electricity because of lack of adequate equipment.

The minister bemoaned the dilapidated equipment being utilized by ZESCO, which he said needed to be rehabilitated to meet the demand of consumers.

World Bank Country Manager Ohene Nyanini noted that the private sector was cardinal in mobilizing 2 billion dollars to avert a blackout in Zambia and the region.

“Unless we put our efforts together in partnership with the private sector, we are at risk of plunging into a blackout because of the deficit,” he said.

EFFORTS IN ADDRESSING POWER SHORTAGE

Speaking during the Zambia Power Market and Growth Prospects Export Potential in the capital Lusaka recently, ZESCO Managing Director Rhodine Sisala said his firm had developed projects aimed at offsetting the projected power deficit both in Zambia and in the region.

Sisala said ZESCO has identified Kafue Gorge Lower hydropower station with a capacity of 75 megawatts, Itezhi-Tezhi, 120 megawatts, and Kariba North Bank extension, 360 megawatts, for immediate development.

He said Kalungwishi Hydro with a capacity of 164 megawatts, Batoka Gorge Hydro with 1600 megawatts and Luapula River Hydro with 950 megawatts would be developed in due course.

“In 1992 we made an attempt to develop new hydropower stations but the private sector failed to rise to the challenge,” he said.

He said in 2003, the government through ZESCO had initiated another strategy to develop the power stations in partnership with China and Iran.

A Memorandum of Understanding has been signed between China’s Sinohydro and the government of Zambia to develop the Kafue Gorge Lower project and assessment of technical, environmental, economical and financial viability of the project has been finalized, said Sisala.

The project is estimated to cost 750 million dollars while the Kariba North Bank extension is estimated to cost 320 million dollars once undertaken. Detailed engineering designs are yet to be done.

Zambia and Iran had also facilitated the partnership between ZESCO and FARAB, an Iranian hydro power development company, to develop the ITT project on the Ithezi Tezhi Hydropower, which including the transmission line has been pegged at a cost of 150 million dollars.