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Electricity situation in Zambia is grave, states IMF

Electricity situation in Zambia is grave, states IMF
By Chibaula Silwamba, Friday Zinyama and Florence Bupe
Friday February 29, 2008 [03:00]

THE electricity situation in Zambia is grave, the International Monetary Fund (IMF) has observed. And SADC director of infrastructure Remmy Makumbe has revealed that power load shedding might continue for the next five years due to the electricity deficit in the region. In a press statement yesterday at the end of an IMF mission’s visit to Zambia, the delegation stated that reforming Zesco was critical for the economic viability of new power generating projects.

The IMF advised that urgent action was needed to ensure that there was additional power generating capacity.

“The electricity situation in Zambia is grave, with available generating capacity falling well short of demand,” the IMF stated. “This situation is compounded by the regional power shortage. External borrowing will likely be needed for investment in additional capacity but should only be undertaken for economically viable projects so as not to undermine debt sustainability.”
The IMF also stated that proposed fiscal regime for the mining sector was expected to generate substantial additional government revenue.

“In implementing the new regime, particular care needs to be taken to maintain Zambia’s attractiveness as a destination for mining investment. Also, it is important to ensure that the additional resources are used transparently and effectively,” it stated. “The IMF mission welcomes the government’s intention to set aside in a special account revenue accruing from the new regime in 2008 for spending in subsequent years when greater capacity for capital spending would have been built up.”
The IMF noted that the 2008 budget maintained the prudent approach to fiscal policy of recent years.

“Zambia’s economic prospects remain good, although not without risk. Real Gross Domestic Product is expected to continue to expand at six to seven per cent per year over the medium term on continued investment in mining and manufacturing, a modest recovery in agriculture and buoyant construction and telecommunication sectors,” the IMF stated.

And addressing journalists yesterday on the electricity problems and resolution of energy ministers from SADC countries that met on February 21, 2008 in Botswana, Makumbe said the power supply was likely to stabilise by 2013.

“The option we have is the power conservation programme. We need to change our habits, even the industry needs to synchronise its activities in such a way that they optimise power,” Makumbe said. “The projects are on-going but once they are completed between 2008 and the year 2013, we will basically be having adequate power supply within the region to provide the demand in terms of the capacity requirement of the region.”

He said generally most power utility companies in the SADC region were reducing power supply to their clients by 10 per cent.
He said the short-term programme SADC had put in place to reduce the shortage of electricity would cost about US $5 billion (about K 18.7 trillion), which would generate about 5500 megawatts and expected to be completed in 2012 or 2013.

“But the long-term programme which is going to give us about 45, 000 megawatts is going to cost us about US $42 billion (about K157.5 trillion). So obviously the issue of financing is very critical,” Makumbe said. “We are currently working with the Development Bank of Southern Africa, Africa Development Bank and NEPAD, with a view to assisting our members states in terms of financing.”

Makumbe also revealed that the task force of energy ministers approved a roadmap to address the problems of power shortages in the region.

“The first factor was to ensure that all the programmes on the ground of power generation capacity are commissioned within the stipulated time line. To this effect the ministers resolved that it is important that we have structures at national level, at regional level that drive these processes,” he said. “In terms of transboundary projects like the Zambia-Tanzania-Kenya interconnector, these will also have some boundary projecting as well as transboundary committees that will work very closely with the SADC secretariat and the Southern Africa Power Pool and there will be very close monitoring of these projects.”
He said the whole SADC region now had a shortage of about 1500 megawatts.

“This situation as we know has been exacerbated by a number of factors, firstly in the last 20 years we have not invested in any power generation capacity, secondly the economic growth in SADC has been very high, if you look at Zambia in particular the opening up of the mines has demanded a lot of power,” said Makumbe.

Meanwhile, the Engineering Institution of Zambia (EIZ) has expressed concern that Zesco Limited and the Energy Regulation Board (ERB) have not availed themselves to discuss the problems of power.

EIZ had earlier threatened to de-register some engineers at Zesco if it was established that the power outage that the country experienced was due to negligence on their part.

In an interview, EIZ president Mundia Muya said his institution had requested to meet Zesco and ERB following a nationwide power outage in January but the two institutions did not avail themselves.

“In spite of the country being endowed with abundant resources for power development and supply, it is sad that the country is experiencing power deficits,” he said.
Muya said the recent power outages and the frequent load shedding have the potential to undo the economic gains that the country has so far achieved if not urgently addressed.

Muya said EIZ was committed to ensuring that engineers mandated to manage technology-based organisations dedicated themselves to promoting the welfare, safety, economic and social well being of the population the profession serves.

Patriotic Front Lusaka Central member of parliament Guy Scott charged that the prevailing frequent power outages were evidence of Zesco’s lack of long-term planning.

“When I served as a consultant for Zesco in 1980, there was talk of the need to expand power generation in view of a future deficit, but nothing was done to equip the country for this period. The power deficit that the region is facing is not something that has just come up now or a few years ago, it has been expected for a very long time,” he said.

Scott said Zesco was failing Zambians by continually making commitments to supply mines with power at the expense of domestic consumers. Scott also castigated Zesco management for limiting media access to vital information on the power situation.

“Zesco is selling itself short by not accessing itself to the press, where is the transparency we are always talking about?” he asked.

Labels: ENERGY, IMF

posted by MrK @ 3:46 AM