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(Bloomberg) — Zambia’s energy regulator is considering an application from the state-owned power utility to increase electricity tariffs by as much as 156% as an emergency measure to cover drought-induced losses.
The price rise will help Zesco Ltd., as the utility is known, to raise $14 million from retail electricity users, the Energy Regulation Board said in in a statement published on its website Aug. 16.
Zambia’s electricity shortage has rapidly worsened as an El Nino-induced drought caused water levels to plunge at the hydropower dams it relies on for about 85% of generation. At Kariba, the biggest, the nation is set to deplete its water allocation by the end of September, according to Zesco.
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The emergency tariff increase threatens to further fan inflation already running at 15.4% in July. Copper mines in Zambia, Africa’s second-biggest producer of the metal, have resorted to trying to secure imported power to cushion the blow of the shortage. Zesco already announced it would ramp up rolling blackouts across residential areas to 17 hours daily.
In its application for the increase, the utility said it faces losses of around $51 million monthly to cover the costs of emergency power supplies, including imports and hiring expensive diesel generator sets. It proposed that the emergency tariffs apply for 9 months.
The drought — Zambia’s worst in decades that’s also halved the size of this year’s staple corn crop — meant that Zesco had a record-low amount of water it can use to generate power from Kariba. The world’s biggest man-made freshwater reservoir had 10.3% of usable water remaining as of Aug. 6. Levels are dangerously low ahead of the rains that usually arrive around November, but start to fill the lake by February.
The energy regulator will hold a public consultation meeting regarding the emergency tariff application on Aug. 21.
(Updates with further details from the fifth paragraph)
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