By HELEN ZULU –
THE Policy Monitoring and Research Centre (PMRC) has said Zesco Limited should revise the lifeline band to 225 kilowatt-hours (kWh) which is the rate of the average consumption of the poorest households.
Energy Regulation Board (ERB) has approved Zesco’s proposal to increase the current lifeline band from 100 kWh to 300kWh which cost at 15 Ngwee per unit.
But PMRC executive director Bernadette Deka said this needed to be lowered as it was currently skewed towards benefitting the wealthiest households.
She said PMRC’s recent research suggested that without alleviating measures subsidy withdrawal could increase poverty.
Ms Deka said it was important for Zesco to set the upper limit at 225kWh because over 50 per cent of the households would never exceed the lifeline rate.
This is contained in a statement released in Lusaka yesterday.
“The current lifeline policy extends subsidies to all electricity users regardless of their income status. Thus the majority of the benefits accrue to the wealthiest households,” she said.
Ms Deka said the wealthiest 20 per cent of the population receive approximately 70 per cent of all subsidies, while the poorest 50 per cent of the population received less than three per cent of the electricity subsidies.
She said poorer households consumed less electricity, average consumption for the bottom 50 per cent of households was 225 kWh each month, compared to 312 kWh for all households.
“Despite this, poorer households spend more of their income on electricity, so removing subsidies has a higher proportional impact on the poorest households. This could increase expenditure by up to 13 per cent of income of poorer households, compared to 6 per cent for the wealthiest households.
“This evidence is illuminating and highlights the challenges of withdrawing subsidies without increasing poverty.
“However, this doesn’t mean subsidies should not be withdrawn, their withdrawal will make large savings for the Zambian treasury and reduce inequality in Zambia,” Ms Deka said.