by Richard Nyamanhindi – SANF 08 No 49
The regional energy regulatory association has called on southern African countries to adjust electricity tariffs bearing in mind the potential negative impact this may have on the more vulnerable members of society.
The chairperson of the Regional Electricity Regulators Association of Southern Africa (RERA), Silvester Hibajene, said recently in Zambia that although the Southern African Development Community (SADC) bloc needs more effective liberalisation and infrastructural development of the energy sector, severe shock-prone tariff changes will impose unnecessarily high cost on people’s living standards, especially among the poor.
Hibajene said while the power shortages were affecting regional economies in general, the principles of cost-reflective electricity tariffs should be applied together with pro-poor measures.
“There are so many questions about the magnitude and impact of tariff reviews as well as questions among stakeholders in the region about their obligations, especially to the poor who are vulnerable to such increases,” he said.
Hibajene said businesses will pass the cost of the hike to consumers who are already feeling the brunt of rising costs of basic commodities.
“It is a sad story and an unfortunate thing because it ends up hitting hard on ordinary people,” he said.
On 1 July, Namibia and Botswana increased their electricity tariffs by 18.6 percent and 20.4 percent respectively and warned that the prices will continue going up over the next five years due to limited generation capacity in the two countries.
In South Africa, the power utility, Eskom was granted a tariff increase of 27.5 percent in June after having had submitted an initial request of 53.7 percent.
In Zimbabwe, the Zimbabwe Electricity Regulatory Commission (ZERC) has been lobbying the government since 2005 for an upward review of electricity tariff structures, which it says, are too low and are hampering power utility ZESA Holdings’ ability to efficiently deliver service, although the bills to consumers increase on a monthly basis due to high inflation.
According to ZERC commissioner general Mavis Chidzonga, the control of electricity tariffs by the Government has been a major cause of the problem regarding supply of power.
“Electricity tariffs have remained very low and are the lowest in the region. The low tariff structure is a major setback in the smooth running of our operations,” she said.
RERA added that high electricity charges could have beneficial effects on the demand side by bringing about changes in consumption patterns. However, they urged energy utility companies in the SADC region such as the Botswana Power Company (BPC), Empresa Nacional de Electricidade of Angola, Nampower of Namibia, Zambia Electricity Supply Company (ZESCO) of Zambia and Eskom of South Africa to consider the effects of exorbitant electricity tariffs on poor citizens who are already suffering due to escalating prices of food and fuel.
They advised SADC Member States to consider the feasibility of targeted subsidies or differential pricing policies geared at protecting the poor in the region.
“In light of the anticipated high energy tariffs, SADC Member States, should consider targeted subsidies for the poor or different pricing policies geared at protecting the majority of the poor in the region,” said a statement by RERA.
In February this year, the Southern African Power Pool (SAPP) highlighted that it is important to ensure that consumers in the region have equitable access to electricity at affordable prices, so as to improve their standards of living. However, there is need for Member States to embrace the principle of cost-reflective tariffs, and adopt regulatory principles in their respective countries, which will enhance those tariffs.
According to SAPP, SADC’s current installed capacity as of April 2008 is 55,000MW while dependable capacity is 47,000MW indicating a deficit of about 8,000MW without giving cognisance to the requisite 10 percent reserve margin.
However, dependable capacity is sometimes further reduced to 41,000MW against peak demand of more than 42,000MW as the available energy capacity differs, depending on the season and other constraints.
Echoing the same sentiments, Zambia’s energy minister Kenneth Konga, who also sits on the SADC energy ministers committee, said the region’s economies were growing at an unparalleled rate in sectors such as mining, agriculture and tourism, resulting in an unprecedented demand for energy.
