Energy, the backbone of development, serving humanity and driving economic growth. Access to energy is essential for Zambia’s key economic sectors: mining, agriculture, tourism, and trading.
The structure of the energy sector in Zambia is comprised of 3 sub-sectors namely; electricity, petroleum and
renewable energy. The energy sector in Zambia is overseen by the Ministry of Energy that provides policy
guidance.
In the electricity sub-sector, ZESCO is dominated by the vertically integrated company owned by the
Government through the Industrial Development Corporation (IDC). It holds over 75 percent of installed
generation capacity, transmission and distribution network in Zambia. Other key players include; Independent
Power Producers (IPPs), Copperbelt Energy Corporation (CEC) and North-Western Energy Corporation
(NWEC), this is according to the ERB Energy sector Report of 2020.
Zambia has potential hydro power capacity of about 6,000 MW. Unfortunately, the country has an installed generation capacity of only about 1,788 MW, which is just a third of its potential. Currently, the country is predominantly hydro and the majority of the power stations (1,640 MW) are state owned through ZESCO Ltd, which is involved in generation, transmission, distribution and supply of electricity.
According to a statement from the Energy Regulation Board, a statutory body under the Ministry of Energy,’ Demand for power in Zambia has been growing steadily over the past few years and currently stands at around 1,300 MW. Generation capacity, on the other hand, has remained fairly stagnant over the past 30 years. Lunsemfwa Hydro Power Company situated in Kabwe is the only independent power producer in the country with an installed capacity of 38 MW. The balance of 110 MW is generated by private mining companies for backup purposes. Only 25% of the Zambian population has access to electricity. In the rural areas, the level of access is less than 5%. Given the cardinal role electricity plays in socio-economic development, the ERB is working closely with all industry stakeholders to promote investment in power infrastructure.’
In relation to petroleum, upstream industry players include TAZAMA Pipelines Limited, INDENI Petroleum Refinery Company Limited, and Tanzania Petroleum Products Limited (TPPL).
TAZAMA is in charge of pumping petroleum feedstock and receiving and storing it in government depots, while INDENI is in charge of refining it into finished petroleum products. TPPL provides downstream companies with handling, storage, and processing services. Downstream players include private OMCs, Retailers (Dealers), and Transporters. OMCs distribute to customers, dealers, and the government. Petroleum products are transported to dealers and consumers via transporters.
The renewable energy sub-sector includes equipment wholesalers and retailers, bio-energy producers, solar mini-grids, utility-scale solar power plants, and small hydro-power generators. With significant water resources for hydropower generation (85% of the country’s total installed capacity), useable energy continues to be harnessed from renewable and carbon neutral sources including sunlight, with keen interest in wind, biomass, and geothermal heat generating. This has resulted in a surge in investment in the renewable energy sub-sector, with over 170 businesses dealing in renewable energy generating equipment and around ten mini-grids producing electricity from RE sources.
3 The New Dawns view on the Energy
During the ceremonial opening of the 1st session of the 13th national Assembly, President of the UPND and the 7th President of the republic of Zambia had this to say,” madam speaker, Energy is an important driving force for development and a key enabler for productivity and industrial growth in our economy. Despite this potential, investment in the sector has not grown in tandem with the sector’s potential. Our administration will ensure that the energy sector has an appropriate policy framework that will deliver affordable and clean energy from alternative renewable green economy sources. This will ensure sufficient capacity to power the economy and cushion the country from the negative effects of climate change on hydro-electricity generation. To attract more investment in the electricity sub-sector, our administration will put in place cost-reflective tariffs. We want more of our people to have access to electricity by scaling up investments in off-grid green energy solutions. We want to transform our country into an electricity hub for the region. We will, therefore, continue to invest in the expansion of electricity generation, minimize transmission and distribution losses as well as develop power interconnectors with other countries. Our aim is to create excess capacity needed to effectively end load shedding with surplus power for export…to improve operations, efficiency and financial sustainability of the national power utility company, Zesco limited, our administration will implement structural and financial reforms…with regard to the petroleum sub-sector, we will guarantee security of supply of petroleum products. In addition, government will undertake reforms in the fuel supply chain to reduce the landed cost of petroleum products. Our administration will progressively increase private sector participation in the procurement and supply of petroleum products.”
Therefore, from the speech made by president Hichilema and further reiterated in their manifesto, the following points are critical, and highly beneficial to the energy sector and economic performance of the country:
1. Private sector Participation
Benefits:
o Improved operational efficiencies, reduced costs and higher plant availability, reduced direct government subsidies obligations.
o Freeing up government financial resources for other higher priority purposes
2. Cost-reflective tariffs
Consumers make better consumption decisions when the true cost of supply is reflected. In this regard, the utility will make informed decision on the actual costs of supplying power to customers.
3. Implement structural and financial reforms
e.g. Integration of emerging technologies like power storage devices, electric vehicles, energy saving devices, smart transmission and distribution systems, etc, are opening for business expansion.
4. Renewable green economy sources
i.e. Investment in Solar energy which provides cleaner and more reliable electricity
5. Expansion of Electricity generation
Privatisation of power generation is likely to curb our national power deficits by allowing investments in power generations. Recently, the government commissioned a $2.3B power plant that would add 750 MW to the national grid, possibly end the country’s power deficit as reported by LusakaTimes.
