Cheap electricity discouraging energy sector investment – PSDA

ELECTRICITY buying agreements entered into by Government have continued to hinder investment into the energy sector by the private sector, says Private Sector Development Association (PSDA) chairperson Yusuf Dodia

Mr Dodia said that power buying agreements hindered private companies from investing in the energy sector.  “Power buying agreements have continued to be a challenge in attracting investment in the energy sector due to low electricity tariffs in Zambia,” he said.

He explained that the private investor needed assurance of their profit through signing power buying agreements with the Government or ZESCO before they could put up new power plants.

“The power purchasing agreements are the ones that have discouraged private investors; but we need to know that the issue of power is not about private sector investment but also about the accessibility of electricity by the Zambian people,” he said.

Mr Dodia said power purchasing agreements could be among the reasons why some power plants which were concessional 10 years ago and only coming on board this year had been delayed. “The Itezhi-Itezhi and Maamba thermal power plants were concessionalized more than 10 years ago to a large multinational company and yet nothing had been done about generating electricity.

“One of the reasons would be that there was no agreement between ZESCO, Government and the private investor on suitable power purchase agreement,” he said.

Mr Dodia said private investors were looking for electricity price of between US 11 cents per kilowatts per hour and 25 cents per kilowatts per hour and yet the price in Zambia was 3 cents to 5 cents per kilowatts per hour which had prompted ZESCO to subsidise.

That meant investors expected ZESCO to buy electricity from them at a higher price and sell it to the consumer at a lower price.

Categorized | Business

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