‘Cost-reflective power pricing good’
Published On December 14, 2015 » 1446 Views» By Bennet Simbeye » Business, Stories
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By MAIMBOLWA MULIKELELA –
THE Bankers Association of Zambia (BAZ) has said the implementation of the cost-reflective pricing and tariffs for electricity will increase appetite for investment in the energy sector from local and international financiers.

. MWANZA

. MWANZA

BAZ chief executive officer Leonard Mwanza said the commitment by the Government to increase power tariffs to reflective levels would raise the drive for private sector investment and participation of financial players in electricity generation.
Cost-reflective tariffs reflect the true cost of supplying electricity and remove reliance on Government subsidies to cover the variance between the current tariffs and the true cost of supply of electricity.
“There is a commitment to increase tariffs so that they are cost-reflective. What this means is that people can invest and borrow from either local or international markets to finance those projects and recoup enough revenue.
“We expect banks will be looking at maybe helping those who will be interested in accessing funding for the energy sector to go towards the energy infrastructure,” Mr Mwanza said.
He said in an interview in Lusaka that BAZ regards the energy sector as being of strategic importance to the development of the country.
“We are actively involved in the financing of the energy sector. One of our banks for example facilitated sourcing of funding for the construction of the Maamba Coal fired plant which is envisaged to be commissioned in June 2016.
“They were lead arrangers on the international market and were able to arrange US$800 million into the project because the ability of Maamba was now tied to cost-reflective tariffs,” Mr Mwanza said.
He said energy investors would now have ability to borrow and be able to sell what they had produced at a cost-reflective margin.
“Now that we are moving into cost-reflective tariffs, we should see increased interest from the commercial banks arranging local financing or being lead arrangers in sourcing financing from offshore financiers for energy projects,” he said.
Mr Mwanza said the commercial banks would continue to be at the centre stage of funding for the energy sector.

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