GOVERNMENT must remove subsidy on electricity and fuel to attract quality investments in the sector, says Energy Forum Zambia chairperson Johnston Chikwanda.
Reacting to President Edgar Lungu’s directive to the Ministry of Energy and Water Development, the Ministry of Finance and Zesco to examine tariffs in the sector during the Press conference on Thursday, Mr. Chikwanda said the best move was to remove subsidies.
“The Energy Forum Zambia has consistently advocated for removal of subsidies on both electricity and fuel. The forum has been of the view that while energy sector subsidies appear to be good, they only directly benefit a narrow segment of society,” said Mr. Chikwanda.
He cited petrol which was heavily subsidized by Government for less than a million vehicles, saying it was unproductive because few people benefited.
“For instance, with regard to petrol station customers, there is less than 1 million vehicles in Zambia. Therefore, it is differentially unfair to keep spending millions of dollars in subsidies to support the few vehicle population at the expense of other pressing needs in the wider society especially rural areas.
‘‘Less than 10 per cent of Zambia’s population own vehicles. A better balance must be found,” he said.
Mr. Chikwanda noted that while energy price escalation has the potential to have a ripple effect, it was important to point out that the Zambian economy was not in a position to support energy-related subsidies worth millions of US dollars.
He said it was noted that failure to inform the public of how much subsidies were being shouldered was not good practice and inadvertently precipitated resistance to reforms and austerity measures when they were introduced.
“Regarding electricity, less than 25 per cent of Zambia’s population has access to electricity while less than 5 per cent of rural area households have access to electricity. Therefore, electricity subsidies worth millions of US dollars have over the years directly benefited a narrow segment at the expense of more than 70 per cent of our population.
‘‘While it is important to keep commodity prices down, achieving this desired end by means of subsidies is unsustainable,’’ he said.
He said President Lungu must be commended for taking bold austerity measures as announced to suspend subsidies on fuel and electricity.
“These measures are consonant with our position as a forum. The forum is however concerned with the cumbersome Government procurement processes in the face of a national crisis which are hampering shift energy sector projects implementation.
‘‘If these bottlenecks are not dealt with, national hopes to have these projects commissioned will be derailed.
We have information from investors who are complaining of the rate at which things are moving,” said Mr. Chikwanda.
He said to actualize the aspirations announced by the President, his forum was appealing to Government to act quickly on the proposals.