Prince Nyati, Lusaka, Thursday 8 August 2024 — An undeniable truth is afoot in Zambia: The country is experiencing a profound and far-reaching energy crisis that is hindering its economic advancement and affecting the living standards of its people. Rolling blackouts, lasting more than twelve hours a day in most areas, have become an unwelcome reality paralysing businesses and plunging homes and neighbourhoods into darkness. This dire situation calls for an immediate and innovative response that goes beyond traditional approaches.
The magnitude of our energy challenge demands a collaborative effort between the government and the private sector. We must leverage the strengths of both – to create synergies, overcome the crisis and build a robust, sustainable energy infrastructure for Zambia’s future.
I believe Public-Private Partnerships (PPPs) – in their broadest sense – offer a viable solution for addressing our energy woes. These partnerships are collaborative arrangements between government entities and private companies, designed to finance, build, and operate projects that serve the public interest. In a PPP, the private sector brings its expertise, efficiency, and capital, while the government provides regulatory oversight and, in some cases, capital as well. However, the government’s most significant contribution is that it ensures there are no delays in the implementation and that public interests are protected.
Public-Private Partnerships as a Dynamic Force for Advancement
The benefits of PPPs in delivering public services and enhancing private-sector operations are vast. PPPs allow for the pooling of resources and expertise, with private companies often possessing specialised knowledge and technological capabilities that can complement the public sector’s regulatory experience and understanding of social needs. PPPs often accelerate project implementation because private-sector involvement often leads to faster completion times and more efficient project management, because companies are incentivised to deliver results quickly in order to start generating returns on their investments.
Forming PPPs is usually intended to ease the financial pressure on the government. With private sector funding, large-scale infrastructure projects can be undertaken without straining the national budget or increasing public debt. Additionally, PPPs often lead to improved service quality. The private sector’s focus on efficiency and customer satisfaction often leads to better-maintained infrastructure and more responsive service delivery.
Successful PPPs in Zambia and Elsewhere
Zambia has already seen successful PPPs in various sectors. In light of our energy crisis, PPPs offer a feasible component of the solution. They can assist us in rapidly expanding our power generation capabilities, upgrading grid infrastructure, and exploring renewable energy options. The private sector’s adeptness at mobilising capital and employing leading-edge technologies aligns well with the government’s mission to ensure energy security and accessibility.
The successful implementation of energy sector PPPs in other African countries present encouraging precedents. For instance, in Kenya, the Lake Turkana Wind Power project—a collaborative effort between the Kenyan government and private investors—has become Africa’s largest wind farm, providing clean energy to millions. Likewise, South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has attracted significant investments into solar and wind projects, enhancing the nation’s power supply.
In Zambia, we have seen encouraging developments with projects like the Itezhi-Tezhi Hydroelectric Power Station, a 120MW joint-venture between Zesco and Tata Power of India that was built over 10 years ago. Other energy projects are the Bangweulu and Ngonye Solar Power Plants, a World Bank-backed collaboration between the Industrial Development Corporation (IDC) and private operator investors. These projects illustrate the potential of PPPs in our domestic energy landscape.
The most recent addition to the above is our own 25MW Lusanje solar plant that is currently under development in Lusaka. It is a joint venture between Serenje Energy and the LSMFEZ. What makes the Lusanje project unique is that it is driven by a private developer rather than traditional institutions such as the World Bank, Zesco or the Zambian government. Although it a JV with a government-owned entity, its development process has been run like any independent power producer and it is fully funded by private funds.
We believe Lusanje forms the blueprint for PPPs in Zambia’s Energy Sector. Despite the progress we have made on our projects, our company has faced many challenges, particularly in the form of delays in obtaining approvals from public agencies and stakeholders. This is where, I believe the current Zambian energy PPP still needs improvement. Despite investing approximately US$1 million in the project, it has taken us about three years to get the project to shovel-readiness. All things being equal, this process should take no more than 6 months, or 12 months tops.
Therefore, In order to fully harness the potential of PPPs in addressing our energy crisis, I believe we need a comprehensive action plan. This should encompass the following:
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Streamlining regulatory frameworks to facilitate the establishment of PPPs: Processes, accountable agencies and associated timelines need to be clearly spelled-out. This information should be consistent and made readily available (preferably, in one place).
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Creating clear guidelines for risk-sharing among public and private partners: Currently, there are no real-time, visible consequences for the public sector entities failing to honour their end of the deal in PPPs. Sure, we can argue that the current energy crisis is possibly a manifestation of such failures, but it is difficult to point to the exact failure or set of failures that brought us here. All in all, it is important to have a system that will ensure that as soon the rainy season returns and the dams are full, we do not forget securing our country’s energy future.
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Ensuring transparency and accountability in PPP agreements: Enforceability of contractual obligations and protections for private partners.
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Building capacity within governmental institutions to effectively oversee PPPs: We need a one-stop shop to manage the government end of partnerships. Based on observed levels of efficiency and professionalism they have shown, I believe the OPPPI office in the Ministry of Energy could possibly do this. That is not to say, the other agencies are not competent. Perhaps the bureaucratic processes in the other agencies tend to slow down their response times.
Overall, when it comes to PPPs, rather than being involved in every step of the development of projects, the role of the government should be to foster an enabling environment that attracts private investment. Careful planning, diligent oversight, and ongoing evaluation are critical to ensuring these partnerships yield value for the Zambian populace.
A Business Model for the Present and Future
As we confront our energy crisis, the time for bold action is now. Public-Private Partnerships represent a powerful tool at our disposal, offering a path to rapidly scale up our energy infrastructure while promoting innovation and efficiency. I strongly urge our government to not only embrace PPPs as a key component of our energy strategy but to champion them. We are already seeing this at some level, but perhaps the next step is to formalise structures. Let us create a regulatory framework that encourages private sector participation while safeguarding public interests. Let us learn from successful models across Africa and adapt them to our local context.
The energy crisis we face is formidable, but it also presents an opportunity to transform Zambia’s energy sector. Through well-structured PPPs, we can not only overcome our current challenges but also position Zambia as a leader in sustainable energy development in Africa. The path forward requires courage, innovation, and collaboration. By joining hands among government, private sector, and citizens – we can illuminate Zambia’s future, power our economy and improve lives across the nation. The time to act is now, and Public-Private Partnerships light the way forward.
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About Prince Nyati
Over 16 years’ experience developing energy and mining projects in sub-Saharan Africa. Started his career in oil, gas and petrochemicals in the USA and has worked in Zambia, South Africa, India and Singapore for companies including Shell Oil, Total Petrochemicals, Eskom and Tata Power. As the Group Head of Africa Business at Tata Power, Prince evaluated over 100 mine assets and 50 power opportunities in 30 countries. Worked on transactions representing over US$1 billion in value. Other experience includes commodity trading, the development and financial close of a 120 MW hydro-electric project in Zambia as well as two wind farm projects (235 MW) in South Africa. Prince has developed a US$150 million, 60MW integrated thermal mine-mouth power project in Madagascar.
For the past 7 years, he has been serving the CEO of London-listed subsidiary, Lemur Holdings, where he still serves as a director. He has served on the boards of Cennergi and the Tsitsikamma and Amakhala Wind Projects.
Prince is currently Chief Development Officer at Serenje Energy, a South African based company that is developing a portfolio of energy projects in the SADC region. These include 125MW of solar generation in Zambia via the Lusanje Solar project in Lusaka and the CVPP Solar on the Copperbelt province of Zambia. These projects are expected to become operational in 2025 and 2026, respectively.
