ENERGY Minister Mathew Nkhuwa says state-owned power utility Zesco recorded K2.8 billion losses in the 2018 financial year.
In 2016, Zesco posted a K137 million loss while in 2017, the losses jumped to K270 million.
He said consequently, Zesco had recorded an unsatisfactory rate of return on assets and had faced challenges to settle debts, owing to its weakened financial position.
The Energy Minister revealed this on Wednesday during a High Level Policy Dialogue Forum with Cooperating Partners in Lusaka.
Mr Nkhuwa observed that the high cost of power purchases from independent power producers and the cost of emergency power imports for 2015 – 2016 had been the major contributor to Zesco’s liquidity challenges.
“This has also affected our ability to attract the significant amount of funding required for the sector’s diversification and successful completion of the significant number of electricity power projects already in pipeline,” Mr Nkhuwa said. He said Government was committed to creating a platform that would remove barriers and promote effectiveness in processes relating to investment in the sector in order to spur private sector participation in power generation.
“Undeniably, a number of private sector players have expressed interest to invest in electricity projects. However, given the market structure, these developers are looking to Zesco Limited to underpin their development as the sole off-taker,” he said.
“Regrettably, the tariffs arising from the new power generation projects are significantly above Zesco’s average selling price, resulting in losses on the utility’s part in the order of millions of United States dollars per year, despite the fact that domestic tariffs were increased by 75 percent (from an average of USD 3.3c/kWh to USD 6.18c/kWh in 2017) and mining tariffs increased to an average of USD9.3c/kWh.”
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