Zambian farmers say the approval of the electricity price hike of 75% by the country’s energy regulator will spell doom for the agriculture sector.
The ERB acting board chairperson yesterday announced that the power tariff adjustment applied to all consumer categories, excluding mines, where negotiations are continuing with the national power company, ZESCO.
Famers slammed the ERB’s decision for the massive hike. It will be implemented in two phases: a 50% increase from May 15 2017 and a further 25% rise on September 1.
“The cost of farming across the value chain has become untenable,” said the CEO of a large commercial agro entity, speaking on condition of anonymity.
He predicts a huge scale-down in production and a hike in food prices, including the national staple, mealie-meal.
“We are fed up with this situation. Our concerns have been completely ignored,” said a commercial farmer.
His sentiment is shared by other farmers interviewed by africanfarming.com.
The Zambia National Farmers Union (ZNFU) and the Millers Association of Zambia (MAZ) opposed the price hike, saying it will stifle growth of the agriculture sector. Both ZNFU and MAZ made numerous submissions calling for irrigation and production-specific tariffs. It was ignored by ZESCO and ERB.
The Zambian government defends the significant power price hike as necessary to address the power deficit by attracting more investments to the sector.
The tariff adjustment will enable ZESCO to generate up to K9.4 billion in revenue in the first year of implementation. This will reduce the net profit loss of K615 million incurred by the company in 2016 by K400 million.