Thursday, July 25, 2024

Government Announces Measures to Address Power Supply Deficit and Adjust Electricity Tariffs

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Energy Minister Peter Kapala has announced a series of measures to manage the country’s power supply deficit and the implementation of a revised electricity tariff structure. The statement was delivered in response to an urgent query by Roan MP Joel Chibuye regarding electricity supply issues in educational institutions.

Current Power Supply Situation
Kapala highlighted that Zambia’s installed electricity generation capacity stands at 3,777 MW, with hydropower contributing 3,154 MW (85% of total capacity) with a current estimated peak demand of 2,600 MW.
Despite this, only 900 MW is currently being generated from major reservoir dams, resulting in a deficit of approximately 750 MW. The deficit has been exacerbated by an El Niño-induced drought, which has significantly reduced water levels in the Zambezi and Kafue River basins.

Load Management and Extended Load Shedding

To prevent a total shutdown of power stations, an initial eight-hour load shedding schedule was introduced on March 11, 2024. However, due to persistent low water levels, the schedule was extended to twelve hours daily, starting May 20, 2024. This extension involves staggered six-hour intervals to each day to ensure that power supply is available until the end of the year and further prevent damage to the power generating machines due to insufficient water levels. Kapala acknowledged potential disruptions due to technical faults or theft of installations but assured that timely communication would be provided to the public.

Exemptions and Strategic Measures
Critical institutions, including health facilities, water utilities, industries, mining firms, and security wings, have been exempted from load shedding. Any outages experienced by these institutions are likely due to technical issues or theft.

To address the power deficit, the government has implemented several short-term measures:

Power Imports: Currently importing 188 MW and reclaiming 160 MW from export contracts.
Restarting Ndola Energy Power Plant: Negotiations are underway to restart the 105 MW plant by July 2024.
Developing Solar PV Plant: A 100 MW solar PV plant in Chisamba is scheduled for completion by December 2024.
Installing Diesel Generators: 120 MW of diesel generators will be installed in Ndola and Mpika.
Streamlined Licensing: The Energy Regulation Board has streamlined licensing processes to encourage the establishment of new generation plants.
Open Access and Net Metering Regulations: Recently approved regulations will allow households and industries to supply electricity to the national grid and earn income.

Long-Term Solutions
For sustainable energy provision, the government has outlined medium to long-term projects:

120 MW Solar PV Portfolio: Development of solar PV projects under the Global Energy Transfer Feed-in Tariff (GET-FiT) program.
Maamba Collieries Phase II: Plans to develop a 300 MW coal power plant with expected financial closure by June 30, 2024.
Luapula CX Hydropower Project: Expediting the development of a 271 MW hydropower project on the Luapula River.
Integrated Resource Plan (IRP) The Integrated Resource Plan (IRP) developed in 2023 outlines a strategy to address electricity challenges through sustainable solutions, projecting the need for an additional 6,505 MW by 2026 with an estimated investment of USD 5 billion. Long-term demand forecasts a total of 23,000 MW by 2050, requiring nearly USD 31 billion in investments.

Electricity Tariff Adjustments
The Energy Regulation Board (ERB) recently approved an upward adjustment of electricity tariffs, effective May 1, 2023, based on the Cost of Service Study. The multi-year tariff application by ZESCO for the period 2023-2027 includes adjustments to residential, commercial, and social categories, and the introduction of a new category for water utility companies.

The approved tariff adjustments are as follows:

37% increase in 2023
9% increase in 2024
15% increase in 2025
10% increase in 2026
14% increase in 2027

Expected Outcomes

The multi-year tariffs are expected to:

  • Improve service delivery
  • Enhance security of supply
  • Strengthen ZESCO’s financial position
  • Encourage private sector participation
  • Maintain ZESCO infrastructure effectively

Minister Kapala emphasized that the current measures, although challenging, are essential for sustaining ZESCO’s operations and attracting investments. The government remains committed to seeking sustainable solutions to resolve the electricity crisis and ensure reliable power supply for Zambia’s future.

7 COMMENTS

  1. Energy Minister Peter Kapala has announced a series of measures to manage the country’s power supply deficit and the implementation of a revised electricity tariff structure. The statement was delivered in response to an urgent query by Roan MP Joel Chibuye regarding electricity supply issues in educational institutions.
    The answer by the minister was a well rehearsed response. Nothing else.

  2. From the stated increments from 2023 to 2027 it would be sum total of 85% tariff/price increase and over 100% price/tariff increase if we start from time New Dawn government took over.
    Factor in the Kwacha depreciation to a dollar then you will be paying lots in Kwacha.
    Big industries and the mines plus investors who negotiate lower tariffs will pay less and you the small scale business person you pay the high tariff and your cost of business will be high so you can’t compete.
    Cost of manufacturing/production will be higher and imports mostly from China will kill the little industry or small scale producer.

  3. From the stated increments from 2023 to 2027 it would be sum total of 85% tariff/price increase and over 100% price/tariff increase if we start from time New Dawn government took over.
    Factor in the Kwacha depreciation to a dollar then you will be paying lots in Kwacha.
    Big industries and the mines plus investors who negotiate lower tariffs will pay less and you the small scale business person you pay the high tariff and your cost of business will be high so you can’t compete.
    Cost of manufacturing/production will be higher and imports mostly from China will kill the little industry or small scale producer.
    When is the promised cost reduction?

  4. The problem with this govt is that it has failed to engage with its citizens. They just come back to report poor results. I will stay away from food security and revenue from mining. We have a lot of expertise in the energy sector locally that the the state has ignored and these should have been engaged earlier in their tenure. Start listening to Zambians! For a start that Integrated Resource Plan (IRP) that has been aforementioned should go out for public comments before it becomes govt policy. It is very clear that this govt does not understand the role of renewables and base load. Send out to the public the IRP so that we do not waste too much time.

  5. The failures of Zesco have been piling up over the years!
    Just like the dwindling water levels in their dams, their competencies have been dwindling likewise…
    Since when did we ever have a shortage of sun and wind?

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