Picture: REUTERS/SIPHIWE SIBEKO
Picture: REUTERS/SIPHIWE SIBEKO

Lusaka — Zambia is in talks with Eskom to import 300MW of electricity, but the retail prices could double once imports begin.

Zambia has a power deficit of more than 750MW because of low water levels at hydropower dams, energy minister Mathew Nkhuwa told reporters on the sidelines of an energy meeting.

He gave no time frame for when imports could start. “[Retail prices] will be maybe double the amount because we are paying half the amount that we are supposed to pay for electricity,” Nkhuwa said.

Zambia, which has been rationing power after a severe drought hit its hydropower sector, has historically priced electricity below the cost of production via subsidies.

Only in recent years has the country started to gradually raise prices.

In 2017, Zambia’s energy regulator approved a 75% price hike for electricity retail consumers and introduced a flat tariff of 9.30 US cents/kWh for mining companies.

Nkhuwa said the government also planned to send a delegation to Mozambique to negotiate a new power-purchase agreement. Zambia cut its economic growth forecast to around 2% for 2019, from an estimated 4%, due to the effects of the drought on its power supply and agricultural production.

Zambia is Africa’s second-biggest copper producer.

Zesco the state-owned utility, is still determining the proposed new tariffs for consideration by the cabinet and a final announcement will be made “soon.”

The increase will fuel inflation, which rose for a fifth straight month in August to the highest level since 2016.

A fall in farm output, which is also due to the worst drought in almost four decades in parts of the country, has already stoked consumer prices. And the spike in oil prices after the weekend attack on Saudi Arabia’s biggest oil plant will prompt a fuel price increase in Zambia, Nkhuwa said.

In March, Zesco asked the energy regulator to more than triple tariffs, but the government rejected this. The last increase was 75% in 2017.

Bloomberg and Reuters