Zambia is on the brink of an energy crisis that threatens to hike tariffs for consumers already feeling the economic hardship caused by the country’s rocketing debt service bill. Load shedding is so severe that power cuts of up to 16 hours have hit the capital, Lusaka. The official explanation is drought, causing low water levels at the Kariba dam, a major source of the country’s energy. But experts and insiders at state power utility Zesco also blame mismanagement and corruption.
Zesco has now lost financial support from the World Bank because it refuses to restructure its bloated workforce and cannot properly account for how funds are spent, we understand, ending its chances of raising a planned US$500 million bond (AC Vol 59 No 10, A swirling fog of debt).
Faced with the prospect of Kariba running dry by December, Zesco announced on 24 September it would import 300MW of emergency power from Eskom, South Africa’s state power company, at a monthly cost of $20.5m. The deal was meant to last six months, starting from 1 October, but no imports have yet begun. Zesco blames bureaucracy, but Eskom’s spokesperson Dikatso Mothae told local media no deal had been signed because Zesco had failed to meet the necessary conditions. These include addressing the outstanding debts Zesco has to Eskom, we understand.
Businesses question why Zesco continues to export power to Namibia and Congo-Kinshasa, instead declaring force majeure domestically to raise tariffs for emergency power. Patriotic Front insiders say the crisis benefits the elite. A deal signed in November 2015 with Turkish company Karpower supplied diesel-generated power to Zambia from a ship stationed off the coast of Mozambique at a hefty 23 cents per kwH. The high price covered commissions paid to politically connected brokers of the deal, including former President Rupiah Banda’s son Henry, Africa Confidential can reveal. Banda and Zesco Managing Director Victor Mudende are on close terms, say PF insiders, who say that Mundende only remains in post because he is complicit in Zesco being used as a cash cow for PF elites. – Africa Confidential