MASSIVE SUBSIDY SHOCK
Wed, 03 May 2017 11:48:29 +0000
By SANDRA MACHIMA
GOVERNMENT should quickly reform the energy sector because it is currently only benefitting a few motorists and industry through massive subsidies at the expense of the economy, energy expert Johnstone Chikwanda has said.
Mr Chikwanda said the sad reality was that the nation was hardly informed regarding the extent of those subsidies and their impact.
The Energy Forum Zambia chairperson said that Government had spent about US$700 million in subsidizing fuel for motorists and the industry in the past two years which has not helped much to grow the economy. He said ‘‘yet the axis of economic bleeding in Zambia lies within the energy sector’’ and without reforms it will be difficult for Zambia to grow the economy.
He said President Edgar Lungu must be supported and his decision for the need to increase electricity tariffs should not be taken lightly.
Mr Chikwanda said Zambia’s economy depended on the petroleum and electricity sub-sectors.
“Energy Forum Zambia shares pain with everyone who will be affected by the proposed tariff adjustment, but what President Lungu has said should not be taken lightly because the axis of economic bleeding in Zambia lies within the energy sector which is made up of the petroleum sub-sector and the electricity
sub-sector,” he said.
He said the President must be supported on grounds that the decision would significantly cut Government electricity subsidies, enabling the Treasury to channel resources to other needy sectors.
“In the past year alone, an estimated $300 million was spent subsiding fuel for motorists and the industry and in the same vein, more than US $400 million was spent in the past year on expensive electricity imports which were sold on the Zambian market at an average loss of 50 percent,” he said
Mr Chikwanda explained that the US $600 million spent in the past one year could actually pay for a medium to large solar panel fitting for all households in Zambia which have no access to electricity and push Zambia’s efforts to meet UN Sustainable Development Goal Number 7 which calls for universal access to clean and affordable electricity for all by 2030.
During the Labour Day commemorations on Monday under the theme “Securing Decent Work for Sustainable Socio-Economic Development,” President Lungu said if the proposed 75 percent electricity tariff was not effected, there was a high risk that the economy could collapse.
Mr Chikwanda agreed with the President’s statement, saying the country could not withstand the economic bleeding where colossal sums of money were being spent to support fuel and
electricity subsidies.
He said the subsidies Government had been spending on electricity had gone to supporting industries more than households, hence the subsidy had not significantly assisted in increasing access to electricity at household level. He said the subsidies only benefitted a narrow section of society as more people were domiciled in rural areas where they lived in extreme poverty and had little to do with electricity and fuel price ripple effects.
Mr Chikwanda noted that the increase in electricity tariffs by 75 percent was a positive measure that would boost the country’s capacity to supply power
sustainably.
