Increase in tariffs to cost reflective levels necessary – World Bank

The World Bank says an increase in tariffs to cost reflective levels is necessary but not sufficient to increase private investment in electricity generation in Zambia.

The World Bank in its Zambia 6^th economic brief says there many other hurdles to overcome citing that even though management and regulation of the sector have been improving, there is still substantial work to do.

The brief suggests that particular efforts are needed to improve sector planning and the procurement processes or larger power projects.

It points out that despite new generation projects, the modeling of different hydrology conditions shows that even in a wet scenario, current power shortages will continue through to at least 2018.

The 6^th brief states that the decision by the authorities to increase the import of expensive emergency power options puts a huge pressure on the budget at current tariff rates.

It furthermore states that in tough economic conditions and unless tariffs are revised upwards, the government’s subsidy of the sector will rise dramatically.