• Zambia has not been able to attract investors in the energy sector due to lower Zesco tariffs.
• There could be many barriers to entry apart from huge capital requirement in the energy sector.
• The investor will look for good return on their investment.
An economist says government’s clarion call for increased private investment in the energy sector for sustained electricity availability will be culminated by higher tariffs.
Speaking to Money FM News, Emmanuel Zulu said this is because the investor will look for good return on their investment in the energy sector and this may see the cost of electricity tariffs go up.
Mr. Zulu noted that there could be many barriers to entry apart from huge capital requirement in the energy sector.
He stated that the country has not been able to attract investors in the energy sector due to lower Zesco tariffs, hence the need to be ready for higher tariffs.
“The move taken to unlock impending issues for the attraction of investment in the energy sector is welcome. There could be many barriers to entry apart from huge capital requirement in the energy sector. Regulatory requirements and distribution facilities could pose a challenge for independent suppliers as the distribution infrastructure is mostly owned by Zesco,” Mr. Zulu noted.
He further said the call for independent energy suppliers to come on board may require serious and deliberate reforms at Zesco, adding that the distribution infrastructure forms an essential facility that other power generation market players may need to use for efficient service delivery.
“We are seeing Zesco being disaggregated to maybe have a function of owning and managing distribution lines which probably the independent players would have to use. The Government however cannot still leave this whole market in the hands of the private sector owing to the importance it has to the overall economy hence therein lies the dilemma,” he added.
Recently, Government Chief Spokesperson, Chushi Kasanda, called on stakeholders to invest in electricity generation and supply to help curb power shortages in the country.
Ms. Kasanda said Zesco’s financial status is not enough to forestall the envisaged power shortages, thus it is imperative to inquire into factors that can persuade private players to venture into electricity generation to come on board.