Zambia needs to tackle barriers of private sector investment into power sector, says think-tank
INTERNATIONAL - The Zambian government needs to do more to encourage more private investment into the power sector by tearing down barriers to private investment, a local think-tank said on Tuesday.
Zambia is facing a power deficit. It has seen the power utility introducing electricity rationing which has now been increased from four hours to six hours due to low water levels in hydropower plants.
While acknowledging that power generated by independent power producers has increased in recent years after tariffs were made more cost-reflective, the Consumer Unit and Trust Society said more needs to be done to encourage more private investment in the sector.
"It is, therefore, important that urgent action be taken to deal with the persistent power deficit to prevent the adverse effects it will have on the Zambian economy. In order to avoid another crisis, it is imperative that the country's energy mix be urgently diversified," the think-tank said in a release.
It added that it was unfortunate that Zambia is still heavily dependent on hydropower, which accounts for about 85 percent of its electricity sources.
According to the think-tank, power generation was the backbone of the economy and the increased power cuts could further worsen the country's fiscal outlook as well as have severe negative effect on businesses.
"With limited access to alternative energy sources, business productivity will likely see a decrease resulting in an increase in the cost of production. These costs are always ultimately passed on to consumers. It can therefore be expected that Zambian consumers will be the most negatively affected," it said.