Zambia Electricity Prices Could Double as Drought Slashes Supply

Taonga Clifford Mitimingi
1 / 2

Zambia Electricity Prices Could Double as Drought Slashes Supply

(Bloomberg) -- Zambia, Africa’s second-biggest copper producer, may double power tariffs as the government seeks more costly imports to offset a shortfall from its drought-stricken hydropower dams.

The southern African nation has an electricity deficit of more than 700 megawatts, about a quarter of total capacity, and wants to buy 300 megawatts from South Africa, Energy Minister Matthew Nkhuwa told reporters in Lusaka, the capital. This will cost more than $20 million monthly, requiring higher prices.

“I think it will be maybe double the amount, because we are paying half the amount that we are supposed to pay for electricity in Zambia,” Nkhuwa said when asked about the tariff increase. Zesco Ltd. the state-owned utility, is still determining the proposed hike for consideration by the cabinet and a final announcement will be made “soon,” he said.

The increase will fuel inflation, which in August rose for a fifth straight month 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.

Eskom Holdings SOC Ltd., South Africa’s state-owned utility, is in talks with Zambia about a supply deal, the company said in reply to emailed questions.

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

Mining companies, including the local units of First Quantum Minerals Ltd. and Glencore Plc, account for about half of Zambia’s power demand and haven’t been affected by power cuts, while households and other businesses endure daily blackouts as long as eight hours.

(Updates with cost of power imports in second paragraph.)

--With assistance from Matthew Hill.

To contact the reporter on this story: Taonga Clifford Mitimingi in Lusaka at tmitimingi@bloomberg.net

To contact the editors responsible for this story: Alastair Reed at areed12@bloomberg.net, Hilton Shone, Jacqueline Mackenzie

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.