Africa Energy Industry: Zambians struggle with power shortage

Over a third, or 37%, of Eskom installed generating capacity was offline as of last Thursday
Thousands jobs are on the line as copper miners scale back operations in the country

The endless drone and stench of diesel fumes are daily irritants but Zambian barber Victor Senti is grateful for the generator that has kept his business going through months of electricity shortages. The 35-year-old is worried about the future as the southern African nation, the continent’s biggest copper producer after Democratic Republic of Congo, grapples with what many say is the worst economic crisis since the end of one-party rule in 1991.

With gloomy newspaper headlines chronicling the impact of falling copper prices, the cost of daily necessities soaring and power cuts lasting up to eight hours, Senti has never felt so pessimistic. “Things are getting tougher here, especially this year,” he said.

“The government has a responsibility to explain to the nation what is happening.” Besides barbers, the power shortages have hit industry and the already struggling mines, pushing growth forecasts for 2015 to below 5% from the initial outlook of 7% and sending the kwacha into a tailspin, losing a third of its value against the dollar in the last two months.

President Edgar Lungu’s government insists it has no control over commodity prices and blames the power shortages on drought and low water levels in hydropower dams. But Batraben Mwandila, who runs a small restaurant selling traditional food to office workers and tourists visiting a nearby curio market, is fed up with the excuses – an ominous sign for Lungu, who faces an election in a year’s time.

“Cooking the food is one thing – we can use charcoal when the power goes – but we also sell beer here, and if people can’t find cold beer they will go elsewhere,” said a visibly angry Mwandila, 31. “For a small business like ours, a generator is expensive and if you look at the cost versus revenue, you’re not making any profit.”

Analysts say the crunch has been brewing for decades as successive governments, starting with Kenneth Kaunda’s disastrous post-independence one-party state, failed to heed calls to reduce Zambia’s over-reliance on hydropower and copper. Now, with a budget deficit projected at more than 5% of GDP and public debt rising sharply, the government has scant resources to throw at either problem.

In the mining belt, thousands of direct jobs – and many more indirect ones – are on the line as the likes of Glencore, Vedanta Resources and China’s CNMC Luanshya Copper Mines scale back operations. Private investors are also reluctant to get involved in power generation and distribution due to Zambia’s low tariffs, meaning the economy will continue to be hostage to the vagaries of the weather for the dams that provide more than 90% of its electricity.

“Organisations like the World Bank have been advising for a long time that there would be a potential power deficit and it was important to start investing in this area,” said Chrispin Mphuka, president of the Economic Association of Zambia.

“From two or three decades ago, this has been on the agenda but there has been lack of political will.” The government is reluctant to ask the International Monetary Fund for help, knowing that it would be likely to insist on politically damaging belt-tightening ahead of next year’s election.

Finance Minister Alexander Chikwanda said this week Lusaka was anxious to curb borrowing as its interest payments have soared, but if need be would opt for longer-term external loans as opposed to short-term IMF money. Whatever the case, the pain for ordinary Zambians is unlikely to ease as the ruling Patriotic Front (PF) scrambles to patch up the structural faults in the economy in the 12 months left before the country goes to the polls. ”

Zambia is a very stable country and I do not foresee instability per se, but since we returned to multi party politics in 1991 I can say very honestly this is the worst crisis we have faced,” said University of Zambia political scientist Alex N’goma. “An answer must be found, and found quickly, otherwise people will get impatient and intolerant, and they will speak when the next election comes around.”(Source: Miningweekly)

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