22 October 2008
THE Government has signed a US$75 million project financing agreement with the World Bank aimed at increasing access to electricity services, efficiency and quality of the country's electricity distribution system.
The project would assist Zesco in implementing demand side management measures as a cost effective short-term response to mitigate the current power shortage and facilitate expansion.
World Bank country representative Kapil Kapoor signed on behalf of the bank's International Development Agency (IDA) while the Zambian Government was represented by Finance and National Planning minister, Ng'andu Magande.
Dr Kapoor said once the project is implemented, it would connect 18,000 new customers in Northern, Central and Eastern regions as well as other rural areas which include households, commercial customers, agriculture processing mills, clinics and many more.
He said effective implementation of these projects by Zesco or the private sector would need to be supportedby cost reflective tariffs that safe-guarded operations as well as Zesco's improved operational efficiencies.
He said increasing the number of metered customers along with billings and collections could significantly impact on revenues to support new projects.
Dr Kapoor said improving operational efficiency and reducing staff costs to competitive levels would also increase consumer confidence and allow significant cost savings.
To achieve the national vision of becoming a middle income economy by 2030, Zambia would need to expand its economy faster than the six per cent a year and that central to this would be the ability to meet the increasing demands for electricity.
He said supporting the development of new mines and industries, coupledwith meeting growing household demands, required increased capacity to produce power.
He said Zambia also needed to undertake reforms that addressed inefficiencies within the existing system to reduce losses, cut operating costs and stimulate investments.
The current rate of access to electricity was only 20 per cent nationwide and three per cent in rural areas but government intended to increase it to 50 per cent by 2030 and achieving that was estimated to cost US$1 billion or annual expenditure of US$50 million for the next 22 years.
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