The government will need to seriously consider the various options on the management and structure of ZESCO limited as the need to unbundle the entity becomes much more realistic. Over the past two years, there has been much debate about the operations of the utility company as customers have called for efficiency levels in the wake of load-shading and upward tariff adjustments.

Just two weeks ago, Energy Minister Kenneth Konga told the Zambia International Business Advisory Council meeting in Livingstone that the option of unbundling ZESCO had not yet been taken to Cabinet. He however, acknowledged that government was already discussing the issue though there were serious difficulties to dismantle the entity owing to the loans obtained from various institutions such as the World Bank. In government’s view, it is not clear how the loans will be treated if the utility is unbundled.

While unbundling the utility to create three separate entities namely power generation, transmission and distribution may not be the best mechanism of ensuring efficiency in the provision of power to industry and households in the country, it is still important to seriously come up with a comprehensive report on this option. In comparative terms, the unbundling of the entity will most likely be the best way of promoting the Public Private Partnership in the energy sector.

With the upward adjustments in tariffs, private players in the sector will find it much more efficient and profitable to partner with government in the existing utility. The positive economic effects of unbundling ZESCO will be in the long term and this will be through increased investment, cost reduction, level playing field for private players, effective management of resources and increased government revenue. The concerns of government on the existing loan arrangements ZESCO entered with multilateral institutions and other lenders can be restructured as well so that this is not seen as a hindrance to a valuable decision.

However, the process of restructuring ZESCO should be through an exhaustive consultative process with all the critical stakeholders; a comprehensive due diligence exercise by a professional body and the decision itself based on economic grounds. The goal is to ensure that power supply in Zambia is embedded in the vision of Zambia of becoming a middle income country by 2030. Under the existing operational structure, it is highly doubtful ZESCO will be in a position to support this process.