Chambers of Mines cries foul over 28.8% electricity tariff hike

Chamber of Mines of Zambia CEO, Mrs Maureen J Dlamini
Chamber of Mines of Zambia CEO, Mrs Maureen J Dlamini
The Chamber of Mines of Zambia has expressed concern on the announcement by the Energy Regulation Board (ERB) to increase electricity tariffs for mining companies under the Bulk Supply Agreement by 28.8 per cent, effective 2nd April 2014.

The Energy Regulation Board (ERB) has authorized state-power utility ZESCO to increase power tariffs for all mining companies in the country by 28.8 per cent.

Chambers of Mines of Zambia Chief Executive Officer, Maureen Dlamini, says while the mines understand the need for utilities to earn a fair return on their investment to be able to efficiently and sustainably operate and maintain the infrastructure, cognizance must be taken of the long term nature of the mining business.

Ms. Dlamini says due to the long term nature of mining investments, corresponding long term planning from a policy and regulatory perspective is necessary to attract and retain investment in this sector.

She points out that power supply to mining companies is governed by commercial contracts entered into mutually by ZESCO and respective companies taking into account the full commercial circumstances prevailing at the time of entering into such contracts, and anticipated to occur over the life of the contract.

Ms Dlamini adds that the mining sector agreed to extra ordinary tariff increases of 35 per cent in 2008 and 30 per cent in 2011 outside existing contracts on the understanding that investments would be made to improve the quality of power being supplied to the industry.

She notes that with the falling of commodity prices on the global market which has been forecasted to remain low over the medium term against the rapid increase in production costs, the mining customers are asking for a robust, transparent and long term tariff migration path.

Ms Dlamini says this would help the mining companies to adequately plan for their critical inputs.

She states that the statement from the ERB is notably vague on how it expects the parties to these contracts to implement its ruling, which has once again been made in total disregard of the of the existence of commercial contracts, and without any prior formal communication to the affected parties in the mining sector.

Ms Dlamini appeals to the Energy Regulation Board to review its decision to increase tariffs for the mining sector as this will exert excessive pressure on the mining companies.

This is contained in a statement made available to QFM News by Chambers of Mines of Zambia Communications Manager, Talent Ng’andwe.