And chairperson of the parliamentary committee on economic affairs, energy and
labour, Kennedy Hamudulu, says Copperbelt Energy Corporation has taken a bold
move to invest in an expensive power generation project on Kabompo River in
Mwinilunga despite the current unfavourable power tariff regime.
Speaking in an interview after the committee toured the site, Mutati said the
country will face an energy crisis if government bureaucracy continues to
hamper efforts by potential investors to build more generation capacity.
He said bureaucracy would not help the country, which needs an additional 600
to 1,000 megawatts of power, requiring an investment of up to US $4 billion to
support government’s move to diversify the economy to other sectors such as
agriculture and manufacturing.
“We have a crisis of private sector investment in the power sector. This crisis
has been driven by a number of factors. There is the issue of bureaucracy. The
various permits, grants, agreements that are required to be used in order to
anchor and support investment. Let us not preach that we want to attract
investment in the power sector on one hand but on a practical side, we are not
facilitating [investment] and using bureaucracy as a tool that slows down even
the investment that we have got in our hands,” Mutati said.
He said because of bureaucracy, CEC had for three years failed to conclude
negotiations with the government for an investment agreement, which was key for
the firm to secure vital funds from financial markets as potential investors
were reluctant to engage the power company on the project.
Mutati said CEC was not in a position to raise from its internal generation the
required US $205 million for the project to take off.
He also said the reluctance by stakeholders to face the reality that the tariff
regime in the country was not cost-reflective and could not attract potential
investment to bridge the widening gap between demand and supply would create a
crisis in the near future.
“We shall end up with a deficit of power such as the one that has confronted
[South Africa’s power firm] Eskom. Eskom was dilly-dallying in terms of
investment in the power sector, now they have reached a crisis point where they
have run out of power. We are also unfortunately proceeding on a similar path
where we have a bit of time to address this issue but we are not doing the
correct things, particularly from a tariff perspective. There is need for
aggression. Unless we address the tariff issue, there is absolutely no way we
are going to attract private sector investment in the power sector,” Mutati
said.
He noted that because of insufficient investment in the energy sector, other
areas of diversification from a copper-driven economy such as agriculture and
manufacturing would be stunted and ultimately lead to slow national economic
growth, increased poverty and fewer jobs.
Mutati said because of the low tariffs, Zesco was spending huge sums
subsidising the sector by selling power cheaply.
And Hamudulu said the current cost of energy at six cents per kilowatt was not
reflective compared with the project, whose construction was based on 13 cents
per kilowatt tariff.
Hamudulu, who was accompanied by Mutati, Margret Miti, Dr Situmbeko
Musokotwane, Wylbur Simuusa and Villie Lombanya, also said the country was
lagging behind in making electricity accessible to the majority of citizens.
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