Mining companies have rejected the recently announced 28.8 per cent increased electricity tariffs by the Energy Regulation Board (ERB) because mining companies will not be able to absorb this cost, especially the high cost producing companies.
Chamber of Mines of Zambia says they were concerned by ERB decision to immediately increase electricity tariffs to mining companies under the Bulk Supply Agreement by 28.8 per cent.
The Chamber has since appealed to the regulation body to review its decision because it would exert unnecessary pressure on the mining companies in Zambia. The mining chief executives officers (CEOs) charged that the non-recognition of the long term nature of the industry would inhibit future investments in the industry due to climate instability and predictable planning parameters of operations.
“Needless to say, if this ruling is sustained, mining companies will not be able to absorb this cost, especially with high production costs. The tariff increase is not sustainable,” they said.
The CEOs said the falling of commodity prices on the international market influences trade in the industry, and that it requires a more required robust, transparent and long term tariff migration path in order to attract and retain investment, and help companies to adequately plan ahead in the sector. The Chamber explained that the industry was dependent on international pricing which has since been forecasted to remain low over a long period against the rapid increase in production costs.
ERB had not indicated how the stakeholders would share the cost forthwith.
“It should be pointed out that power supply to mining companies is governed by commercial contracts entered into mutually by ZESCO and respective companies taking into account the full commercial circumstances prevailing at the time of entering into such contracts, and anticipated to occur over the life of the contract,” the statement states.
The companies complained that ERB had ratified the increment with total disregard of the existing commercial contracts and prior formal communication to the affected parties.