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In Zambia Government announces sharp rise in electricity tariffs

"The proposed tariff adjustment is expected to generate revenue that will facilitate investment of $3.7 billion in generation projects, thereby adding capacity of 1,500 megawatts to the national grid," the regulator said.

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A bulb hangs inside a restaurant in Madrid December 23, 2013. REUTERS/Andrea Comas play A bulb hangs inside a restaurant in Madrid December 23, 2013. REUTERS/Andrea Comas (Reuters)

Zambia announced a sharp increase in electricity tariffs on Wednesday, aiming to generate revenue for investment in additional supply, but said mining firms would be exempt.

The average price of electricity was raised to 10.35 U.S. cents per kilowatt hour (KWh) from 6 U.S. cents per KWh with immediate effect, the power regulator said in a statement.

State power utility Zesco Ltd had applied for the higher tariffs in October, saying it had to increase the price of electricity due to rising costs and a depreciation of the kwacha currency, which had pushed up import prices.

"The proposed tariff adjustment is expected to generate revenue that will facilitate investment of $3.7 billion in generation projects, thereby adding capacity of 1,500 megawatts to the national grid," the regulator said.

The regulator said a drastic reduction in hydro power generation capacity as a result of low water levels following a drought had led to a severe energy deficit, requiring the import of emergency power at a huge cost to the government.

Mining companies were unaffected by the increase because they do not get their power from Zesco. Zambian power supplier Copperbelt Energy Corp. buys electricity from Zesco in bulk and sells it to mining companies including the local units of Vedanta Resources and Glencore.

Zambia's economy is likely to grow by less than 5 percent in 2015 due to the power crunch, which has hit output at mining firms, already grappling with a slide in global copper prices.

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