Bloomberg News

Zambia Mulls Power Imports to Meet Demand From Miners

January 10, 2013

Zambia’s energy regulator proposed that the government of Africa’s biggest copper producer should import power from the region to stem a shortfall.

The country could buy electricity from members of the Southern African Power Pool, a common market for electricity in the 15-nation Southern African Development Community, including Mozambique, the Democratic Republic of Congo and South Africa, Energy Regulation Board Chairman George Chabwera said yesterday. The regulator also wants the government to introduce a so-called grid code, which would make it easier for private producers to sell directly to consumers, he said.

“That’s where the earth-moving decisions will be,” he said in an interview in Lusaka, Zambia’s capital.

The southern African nation is suffering from a power deficit that is hampering growth in the mining industry. Zambia’s biggest power producer, Zesco Ltd., plans to spend about $5 billion to address the shortfall, according to the utility. Companies including Glencore International Plc (GLEN), Barrick Gold Corp. (ABX) and China Nonferrous Metal Mining Co. have mines in the country.

By using a grid code, private producers would pay a set fee to provide power to customers using existing electricity transmission lines, said Chabwera, who took over as chairman Nov. 29.

Zambia has a power shortage of 70 megawatts in peak periods, Zesco Managing Director Cyprian Chitundu said by mobile phone. The producer is in the process of asking mining companies to reduce their usage by about 100 megawatts in the evenings, he said.

Usage Reduction

“At peak, if they could just cut down by 10 megawatts to 15 megawatts each, it would really help,” Chitundu said. The curbs will last for the next nine months, until the utility brings additional generation capacity into production, he said.

Zesco applied to the Energy Regulation Board to raise electricity prices by an average of 26 percent from Nov. 1 in July, partly to fund its expansion plan. The regulator was unable to make a decision because it didn’t have a board until Nov. 27. A ruling, which won’t be backdated, will be made by the end of March, Chabwera said. Zambia’s annual inflation rate was 7.3 percent in December.

“We are between a rock and a hard place,” he said. Consumers don’t want prices to increase while the utility is undertaking scheduled power cuts to keep demand in check, said Chabwera.

The kwacha appreciated 0.7 percent to 5.235 per dollar by 8:50 a.m. in Lusaka, paring its gain this year to 0.9 percent.

“You could call it a chicken-and-egg situation,” Chitundu said. The power utility needs funds from a higher tariff to improve its services, he said.

Zambia relies on hydro-power for more than 90 percent of its current 1,750 megawatts of generation capacity, almost all of which Zesco operates.

To contact the reporter on this story: Matthew Hill in Lusaka at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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