WHY DO WE ZAMBIANS NOT LEARN FROM OUR PAST MISTAKES?
During the MMD reign, the government signed development agreements with a 20-year tenure to attract FDIs. This meant that the terms and conditions could not be altered until after 20 years.
Zesco was a key casualty of such agreements as in some cases they were bound to supply power for as low as 4.5c per KWh even when their generation costs were way above the 4.5c. Even when Mamba Collieries came on board, Zesco would buy power from Maamba for about 10.5c and sell it at 4.5c. That was the beginning of Zesco financial woes.
The shortsightedness of such agreements was that it was assumed that all the power would be hydro generated and pricing was based on hydro power generation. As energy mix started changing with thermal coming on board and imported power arising from climate change induced, low hydro power became scarce. Zesco subsidised the industrial power supply. Zesco has since not recovered from this oversight.
We are seeing similar issues arising under the UPND. Twenty-five years road concessions under the PPP guise, yet the money used is coming from NAPSA. Mining tax concessions and waivers to attract investments.
We are seeing Mopani being given away literally for free, and the Minister of Mines lamentably fails to explain the transaction in Parliament only to be saved by the Speaker. He could not even understand that ZCCM-IH owned 100% of Mopani and ZCCM – IH is an IDC subsidiary, and he argues that GRZ has no shareholding in Mopani. Surely, should Zambians be subjected to such blatant low-level deceit and expect our economy to grow?
The reality at the end of the day is when the concessions expire, mines will come up with different tactics to avoid paying the taxes. This movie has played out over and over. We saw the now celebrated Anglo-American abandon KCM when times were bad, and now they are back because times are good.
How do you explain a shrewd businessman like Argawal of Vedanta who ran KCM after taking over from Anglo-American for a paltry $25 million for 20 years. He never paid taxes because they claimed the mine was loss-making. Which businessman can keep a loss-making business for 20 years without exiting?
This reminds me of a story where a spider asked a frog to help it cross the river by jumping on the frogs back. The frog said, “But you have a poisonous tail, and if you bite me, I will die.” The spider explained that if I bite you in the middle of the water, we will both sink and die. The explanation sounded more than convincing, and the frog agreed. As they were reaching the water shores of the river, the frog felt a sting on its back and said, “You have bitten me.” The spider said, ‘Sorry, that is just my habit.”
The moral of the story is mining houses/investors are not your friends. They are there to make massive profits, and once their mission is accomplished, they will abandon you.
By the way, can Zesco give us the power supply outlook for 2025 in advance regarding how many hours of load shedding we are likely to endure so we can plan ahead.
We also wish to remind the Minister of Finance who seems to have a monolistic economic recovery programme, which is anchored on mining production that you can not put all your eggs in one basket. Commodity trading is a risky business. We have seen it before, where crude prices dropped to as low as $30 per barrel and, in a short period, bounced back as high as $120. The same came happen to copper. Whilst the outlook is currently very exciting , it could reach $20,000 per MT, and the reverse could happen due to unforeseen future events. He should read the “Portifolio Diversification Theory”.
It’s up to you, Zambians, that you need a new government. The current regime is short-sighted with no real future plan.
Fred M’membe
President of the Socialist Party.