15 November 2012

Zambia: ZNFU Demands Freeze On Tariff Hike

THE Zambia National Farmers Union (ZNFU) has proposed that the Government should put a moratorium against the increase in electricity tariffs in the country to enhance national productivity.

ZNFU president Jarvis Zimba said Zesco should only be allowed to adjust the tariffs in line with the average inflation rate for the last two years.

Commenting on Zesco's proposal to increase the tariffs by 26 per cent, Mr Zimba appealed to the Energy Regulation Board (ERB) to recommend to the Government that power tariff increases should be suspended.

"This dilemma can only be resolved by ERB recommending to Government that a moratorium be affected on electricity tariff adjustments and only restrict any increase to the average inflation rate for the last two years," he said.

He said the ERB should not accept Zesco's application to revise electricity tariffs upwards.

ERB says the process of reviewing Zesco's proposal for the increase in electricity tariffs, which should have been effected on November 1 2012, is still under consideration.

But Mr Zimba said farmers believe if approved the 26 per cent increase in tariffs would increase the cost of production for the agricultural sector which would affect competitiveness of the products and lead to a rise in inflation.

He said the timing for the proposed tariff increment was also wrong because of the various other policy changes that Government had embarked on in many areas.

ZNFU has come up with a position paper on Zesco's proposed electricity tariff hike, which shows that if effected it will lead to the increase in the cost of labour and requirements.

"Importers now have a hedge by charging higher prices on imported inputs to guard against uncertain future exchange rate risks and farmers have no option but to bear these costs," he said.

Mr Zimba said the proposed electricity tariffs would be a big blow to the productive sector especially for commodities that were highly dependant on electricity such as wheat, poultry, tobacco and small agro-processing businesses.

In a public notice, ERB says that while Zesco, through its tariff application, sought to effect the proposed tariffs on November 1 2012, the current electricity tariffs will remain unchanged until the tariff determination process was completed.

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