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Monday, 1 October 2012

Parastatal Madness, 19th Edition

We have long observed that the failure of parastatals to perform has largely been down to the failure by central government to pay parastatals the debt owed to them. Energy Deputy Minister Charles Zulu recently noted that Government Ministries owe ZESCO over K190 billion in unpaid electricity bills. To help address the situation, the government apparently intends "to settle the bill through the introduction of pre-paid meters in all government ministries... 40 percent of all electricity purchased will be going towards offsetting the bill". 

It is not clear how this will work in practice. One can imagine doing this for local offices and general buildings but not front line services e.g. hospitals, police stations. At the end of the day the real problem is that there are pervese incentives for Government to let ZESCO carry the loses because it is an easier way of hiding inefficiencies. The public does not understand that it is losing out on ZESCO. What it is actually told is that we have little capacity because as an economy we are growing, which is true but not the whole truth!

1 comment:

  1. Putting prepaid meters in Government offices will only work if those offices are funded. Otherwise they will just dream up new ways of taxing the public to pay their bills instead of using the existing taxes to pay them. Government funding also tends to be somewhat erratic and usually late.
    Aside from what Government owes in unpaid bills we are not told how much ZESCO funds were being used to fund campaigns for the former ruling party or what measures are being put in place to ensure that such misuse does not continue.
    50% of electricity produced goes to the mines. The mines will not be paying what it costs until 2015. If the copper price crashed, load shedding would end.

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