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Page 1: C Power Sector

C Power Sector

Page 2: C Power Sector

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C Power Sector ―――――――――――――――――――――――――――――――――――――――――――

C.Power Sector

C-1 Present Status of the Power Sector in Zambia

(1) Organization and Regulations

Electric utility in Zambia is under the jurisdiction of the Ministry of Energy and Water Development

(MEWD) and operates based on the policies established by MEWD. The Electricity Regulation Board

(ERB) under the Ministry supervises the power companies in accordance with the Electricity Act, Cap 433,

1995, 2003 and the Energy Regulation Act, Cap 436, 1995, 2003. For example, in the case of a power

company that requires tariff revision or a new company that wishes to participate in the power utility

business, approval must be obtained from the ERB.

At present, Zambia Electricity Supply Company (ZESCO) is the largest, and unequalled, electricity

company in Zambia, running and operating power stations, transmission lines, and distribution networks.

ZESCO shares are owned by the Government of Zambia. The other major power company is Copperbelt

Energy Company (CEC), which was established in 1997 after the privatization of a state-owned copper

mine. The company purchases electricity from ZESCO and retails it to copper mining companies. In 2003,

revision of the Electricity Act, Cap 433 allowed the participation of private companies, which have

subsequently begun selling electricity to ZESCO, generated by their own small hydropower stations.

Power supply in Zambia started with a small thermal station built in Livingstone in 1906 to provide power

to part of the town. In spite of the Victoria Falls hydropower potential, it was not until 1938 that

hydropower was first generated at a small station on the third gorge located downstream from Victoria

Falls, and other regions gradually became electrified by small thermal stations. The present ZESCO was

established from a state-owned electricity company formed by the consolidation of three major local

electricity companies in 1970 based on the Companies Act, Cap 388, 1970. The three companies are

Central Electricity Corporation Limited (CEC), the Northern Electricity Corporation Limited (NESCO),

and the Victoria Falls Electricity Board.

CEC was established in 1953 to supply electricity to

consumers in Lusaka, the capital of Zambia, and its

surroundings. NESCO succeeded the electric utilities

based on small hydropower stations in the eastern

countryside from the former Government of North

Rhodesia in 1960 and supplied electricity to mining

companies. NESCO also purchased electricity from

Copperbelt Power Company (CPC) and retailed it to

consumers in the Copperbelt distribution network.

The Victoria Falls Electricity Board, established in Old coal-fired thermal power station at

ZESCO Head Office compound (15 MW) The plant used imported coal and stopped operations after

completion of Kariba North Bank Hydropower Station.

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Chapter 4 Sectoral Development Strategies ―――――――――――――――――――――――――――――――――――――――――――

1951, supplied electricity generated by the aforementioned small hydropower station built downstream

from Victoria Falls in 1938.

The former ZESCO, a state-owned electricity company, was privatized in 1996 and became the present

government-owned Zambia Electricity Supply Company (ZESCO) in 2003 mainly because of financial

difficulties. 4) In June 2004, the Kariba North Bank Company Limited (KNBC), which had previously

retailed electricity to ZESCO, was integrated into the company. ZESCO is presently the largest, and

unequalled, electricity company in Zambia, running and operating power plants, transmission lines and

distribution networks.

NOTES: Board of Directors chosen from the following institutions: • Engineering Institute of Zambia (EIZ) • Economic Association of Zambia (EAZ) • Zambia Farmers Union (ZFU) • Bankers Association of Zambia (BAZ) • Ministry of Energy and Water Development (Permanent Secretary) • Ministry of Finance (Secretary to the Treasury)

Source: ZESCO

Company secretary

SHAREHOLDERS (GOVERNMENT)

BOARD OF DIRECTORS

MANAGING DIRECTOR

Director Engineering Development

Director Finance

Director Generation & Transmission

Director Distribution &

Supply

Director Power Rehabilitation

Projects & Generation Projects

Director Human Resources

Director Customer Services

Figure C-1 Organization of ZESCO

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C Power Sector ―――――――――――――――――――――――――――――――――――――――――――

Rural electrification was implemented by the Department of Energy (DOE) of MEWD mainly through

expansion of transmission lines, which were constructed by ZESCO under a DOE subcontract funded by

the Rural Electrification Fund established in 1994. However, rural electrification projects did not progress

smoothly because of DOE’s limited capabilities. Accordingly, MEWD formed a new organization, the

Rural Electrification Authority (REA), in order to promote rural electrification as well as establish the

Rural Electrification Act in 2003.

(2) Southern African Power Pool: SAPP

The Southern African Power Pool (SAPP) was established in 1995 to create an international power market

in the Southern African Development Community (SADC) by the seven original member countries. As of

2006, twelve of the fourteen SADC countries had joined SAPP: Botswana, Mozambique, Malawi, Angola,

South Africa, Lesotho, Namibia, Democratic Republic of Congo (DRC), Swaziland, Tanzania, Zambia, and

Zimbabwe. Nine of the twelve countries are already linked by interconnection lines (the exceptions are

Angola, Tanzania and Malawi) and are managing an international power market. SAPP has facilitated

broadband infrastructure in SADC in order to efficiently and effectively trade electric power among the

countries utilizing cheap electricity generated by coal-fired thermal plants in South Africa and abundant

hydropower potential in the other countries.

Zambia has two international interconnection lines to DRC and Zimbabwe with 220 kV and double circuits

of 330 kV lines, respectively. Through these

lines, Zambia participates in import and export

of power among SAPP countries and wheeling

between neighboring countries. Figure C-2

shows an interconnection line route with an

ongoing 220 kV line to Namibia and a new 330

kV route to Tanzania/Kenya.

A 220 kV interconnection line between the

Victoria Falls Substation in Zambia and the

Sesheke Substation in Namibia is now under

construction at a total estimated cost of

US$ 12 million with financial assistance from

the African Development Bank (ADB) and the

Development Bank of Southern Africa (DBSA).

The 230 km interconnection line is scheduled

for operation in May 2006. The line is planned

to reinforce the existing 66 kV line and extend

it to Namibia.

DRC(SNEL)

Zambia(ZESCO)

Zimbabw e(ZESA)

Botsw ana(BPC)

South Africa(ESKOM)

Namibia(NamPow er)

Sw aziland(SEB)

Lesotho(LEC)

Mozambique(EDM)

220kV

2 x 330kV

Tanzania(TANESCO)

330kVPlan

Kenya(KPLC)

220kVunder

construction

Figure C-2 Conceptual diagram of SAPP interconnection line

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Chapter 4 Sectoral Development Strategies ―――――――――――――――――――――――――――――――――――――――――――

Another new 330 kV interconnection line is planned to link Zambia, Tanzania and Kenya. The

Memorandum of Agreement for its development was signed by three countries in March 2004, and

financial arrangements are ongoing. The line consists of 600 km in Zambian territory and the total

construction cost is estimated at US$ 350 million.

(3) Existing Power Facilities

The total installed capacity in Zambia was 1,838 MW as of February 2006, as shown in Table C-1. ZESCO

owned 1,700 MW and the remaining 138 MW power stations are owned by private companies such as

Copperbelt Energy Corporation (CEC) and Konkola Copper Mines (KCM). Most of the private companies

purchase electricity from ZESCO and retail it to mining companies. Gas-turbine power plants owned by the

private companies are maintained as standby emergency power. Two small hydropower stations,

Lunsemfwa (18 MW) and Mulungushi (20 MW), are owned by private companies that sell their power to

ZESCO.

The breakdown of installed capacity of ZESCO’s plants as of February 2006 is presented below:

Hydropower plants (over 100 MW) 1,668 MW (98.1%)

Small hydropower plants 24 MW (1.4%)

Diesel power plants 8 MW (0.5%)

Total installed capacity 1,700 MW (100%)

The installed capacity of three hydropower plants owned by ZESCO, namely Kariba North (660 MW,

commissioned in 1976, upgraded by 60 MW in 2005), Kafue Gorge (900 MW, 1972) and Victoria Falls

(108 MW, 1936) shares 98% of the total installed capacity of ZESCO power plants. Small hydropower

plants have been synchronized to the National Grid step by step since they were developed as power

sources for independent power networks in the rural areas. At present, all four small hydropower plants are

synchronized as both Musonda Falls (5 MW) and Chishimba Falls (6 MW) were linked to the National

Grid in 2004. These four plants might have been the main power sources when ZESCO began supplying

power. Diesel power plants, which are still being operated in remote areas, will be abandoned after the

expansion of the National Grid because of their high generation costs at 19–26¢/kWh. For example, the

Kaoma Diesel Power Plant (2.62 MW) is to be abandoned because the area is about to be linked with the

National Grid.

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C Power Sector ―――――――――――――――――――――――――――――――――――――――――――

Table C-1 Existing Power Stations

a. ZESCOas of February 2006

Type ofStation Station Name

InstalledCapacity

(MW)

AvailableCapacity

(MW)

Numberof Unit

UnitCapacity

(MW)

CommencementYear Remarks

Kariba North 660 660 2 180 1976, 2005 No.1 & 2 w ere upgraded from 150 MW in 20052 150 1976 under rehabilitation

Kafue Gorge 900 600 4 150 1971-1972 under rehabilitation2 150 1977 under rehabilitation22

13

1936 Station A, rehabilitation completed

108 6 10 1968 Station B, rehabilitation completed4 10 1972 Station C, rehabilitation completed

1,668 1,368Lusiw asi 12 12 4 3 1970, 75 already synchronizedMusonda Falls 5 5 5 1 1960, 72, 77, 82 synchronized to National Grid in 2004Chishimba Falls 6 6 1960, 68, 73, 75 synchronized to National Grid in 2004Lunzua River 0.75 0.75 3 0.25 1960 already synchronized

23.75 23.75Mw inilunga 1.13 1.13Kabompo 1.13 1.13Zambesi 0.42 0.42Mufumbw e 0.76 0.76Kaoma 2.62 2.40Luanggw a 0.29 0.29Lukulu 0.51 0.51Chama 0.53 0.53Kaputa 0.67 0.67

8.05 7.831,699.802 1,399.582

b. Private Owned Power Stations

Type ofStation Station Name

InstalledCapacity

(MW)

AvailableCapacity

(MW)

Numberof Unit

UnitCapacity

(MW)

CommencementYear Remarks

Bancroft 20 20 2 10 1972 CECLuano 40 40 2 20 1969 CECLuanshya 10 10 CEC

Hydro Lunsemfw a 18 18 3 6 1944 ow ned by privateGT Mufulira 10 10 1 10 CEC

Hydro Mulungushi 20 20 4 2 to 6 1924, 27, 39 ow ned by privateGT Nkana 20 20 1939 KCM

138 138CEC: Copperbelt Energy Corporation GT: Gas Turbine Pow er StationKCM: Konkola Copper Mines Hydro: Hydropow er Station

Grand Total

Sub TotalGrand Total

Diesel

GT

Sub Total

MiniHydro

108Victoria Falls

Sub Total

Hydro

(4) Transmission and Distribution Facilities

The National Grid consists of transmission lines of 330 kV, 220 kV, 132 kV, etc. that cover areas linked

with Livingstone, Lusaka, the Copperbelt, and three major hydropower stations, as shown in Fig. C-3.

Interconnection lines of 330 kV (2 circuits) and 220 kV extend to Zimbabwe and DRC, respectively. The

interconnection line to Zimbabwe runs into South Africa and forms part of SAPP. The National Grid is also

linked to Tanzania and Namibia by interconnection lines of 66 kV so as to export electricity from Zambia

to both countries.

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Chapter 4 Sectoral Development Strategies ―――――――――――――――――――――――――――――――――――――――――――

PROPOSEDHYDROPOWERSTATION

PROPOSEDDIESEL STATION

D RCONGO

TANZANIA

MA

LAW

I

MOZAMBIQUE

ZIMBABWE

NAKONDE

KASAMA ISOKA

CHINSALI

MPOROKOSO

LUWINGU

MPIKA

PENSULO

SERENJE

CHIPATA

CHIRUNDU

LEOPARDS HILL

KARIBA SOUTH

MUSONDA FALLS(5MW)

LUSIWASI(12MW)

MULUNGUSHI(20MW)

MSORO

LUNDAZI

MFUE

AZELELUNSEMFWA(18MW)

CHISHIMBA FALLS

LUNZUA(0.75MW)

MBALA

SAMFYA

KASHIKISHI

PETAUKE

MOMBUTUTA

CHIENGI

LUAPULA RIVER

To Sumbuwanga

KALUNGWISHI RIVER

MPULUNGU

NAMIBIABOTSWANA

ANGOLA

KALABO MONGU

SENANGA

SESHEKE

SOLWEZI

ITEZHI – TEZHI(120MW)

VICTORIAFALLS

(108MW)

MUZUMA

MICHELO

LUANO

KITWE

MAPOSA

KANSUSWA

KABWE

KAPIRIMPOSHI

MPONGWE

LUSAKA WEST

KAFUE WEST KAFUE TOWN KAFUE LOWER(750MW)KAFUE GORGE

900MW(1080MW)KARIBA NORTH(600MW(750MW)

LAKE KARIBA

MAZABUKA

MUMBWA

MANSA

MAMBILIMA

KAFUE

RIVER

ZAM

BEZIRIV

ER

CHAMBESHI RIVER

WEST LUNGAat West Lunga River

(2.5MW)

KASEMPA CHIKATA FALLS

(3.5MW)

MUFUMBWE

LUKULUKAOMA

220kV

22o East

33.5o East

8o

18oKATIMAMULILO

ZAMBEZI

LUANGWA

132kV

88kV

66kV

330kV

EXISTING POWER¥SUBSTATIONSAND POWER LINES

PROPOSED POWER¥SUBSTATIONSAND POWER LINES

330kV

220kV

132kV

88kV

66kV

HYDRO POWERSTATION

SUBSTATION

DIESEL STATIONPROPOSED SUBSTATION

CHONGWE

CHAVUMA

KABOMPO

MWINILUNGA

KANSANSHI

LUMWANA(Mine)

KAPUTA

NCHELENGE

CHAMA

KUNDABWIKA (101MW)

KABWELUME(62MW)

KAWAMBWA TEA

MBERESHI

LUSIWASIEXTENSION(40MW)

KARIBA NORTHEXTENSION(600MW(750MW)

BATOKA GORGE(800MW)

DEVILS GORGE(800MW)

BWANA MKUBWA

ROMA

COV.

NAMPUNDWE

MAAMBAKATIMAMULILO

KABOMPO Gorge(34MW)

LuangwaBridge

Mkushi

MkushiFarm Block

Mkushi Central

KawambwaTown

Chambasitu

SHANGOMBO

MUYOMBE

ZESCO GRID (66 – 330kV)

D RCONGO

TANZANIA

MA

LAW

I

MOZAMBIQUE

ZIMBABWE

NAKONDE

KASAMA ISOKA

CHINSALI

MPOROKOSO

LUWINGU

MPIKA

PENSULO

SERENJE

CHIPATA

CHIRUNDU

LEOPARDS HILL

KARIBA SOUTH

MUSONDA FALLS(5MW)

LUSIWASI(12MW)

MULUNGUSHI(20MW)

MSORO

LUNDAZI

MFUE

AZELELUNSEMFWA(18MW)

CHISHIMBA FALLS

LUNZUA(0.75MW)

MBALA

SAMFYA

KASHIKISHI

PETAUKE

MOMBUTUTA

CHIENGI

LUAPULA RIVER

To Sumbuwanga

KALUNGWISHI RIVER

MPULUNGU

NAMIBIABOTSWANA

ANGOLA

KALABO MONGU

SENANGA

SESHEKE

SOLWEZI

ITEZHI – TEZHI(120MW)

VICTORIAFALLS

(108MW)

MUZUMA

MICHELO

LUANO

KITWE

MAPOSA

KANSUSWA

KABWE

KAPIRIMPOSHI

MPONGWE

LUSAKA WEST

KAFUE WEST KAFUE TOWN KAFUE LOWER(750MW)KAFUE GORGE

900MW(1080MW)KARIBA NORTH(600MW(750MW)

LAKE KARIBA

MAZABUKA

MUMBWA

MANSA

MAMBILIMA

KAFUE

RIVER

ZAM

BEZIRIV

ER

CHAMBESHI RIVER

WEST LUNGAat West Lunga River

(2.5MW)

KASEMPA CHIKATA FALLS

(3.5MW)

MUFUMBWE

LUKULUKAOMA

220kV

22o East

33.5o East

8o

18oKATIMAMULILO

ZAMBEZI

LUANGWA

132kV

88kV

66kV

330kV

EXISTING POWER¥SUBSTATIONSAND POWER LINES

PROPOSED POWER¥SUBSTATIONSAND POWER LINES

330kV

220kV

132kV

88kV

66kV

HYDRO POWERSTATION

SUBSTATION

DIESEL STATIONPROPOSED SUBSTATION

CHONGWE

CHAVUMA

KABOMPO

MWINILUNGA

KANSANSHI

LUMWANA(Mine)

KAPUTA

NCHELENGE

CHAMA

KUNDABWIKA (101MW)

KABWELUME(62MW)

KAWAMBWA TEA

MBERESHI

LUSIWASIEXTENSION(40MW)

KARIBA NORTHEXTENSION(600MW(750MW)

BATOKA GORGE(800MW)

DEVILS GORGE(800MW)

BWANA MKUBWA

ROMA

COV.

NAMPUNDWE

MAAMBAKATIMAMULILO

KABOMPO Gorge(34MW)

LuangwaBridge

Mkushi

MkushiFarm Block

Mkushi Central

KawambwaTown

Chambasitu

SHANGOMBO

MUYOMBE

ZESCO GRID (66 – 330kV)

Source: ZESCO presentation material

Figure C-3 National Grid in Zambia

The total length of transmission lines in the National Grid was 6,678 km as of March 2005, as shown

below:

330 kV 2,236 km

220 kV 348 km

132 kV 229 km

88 kV 817 km

66 kV 3,048 km

Total 6,678 km

Power supply through distribution lines in Lusaka has

a long history starting with a coal-fired thermal power

station (15 MW) before the three major hydropower

stations were constructed in the 1970s. However,

there are still unelectrified areas even in Lusaka, the country’s capital, due to exponential growth of

population and rapid urbanization. Livingstone and Ndola, main towns in their region, have similar

problems such as insufficient transformer capacity, deteriorating distribution networks, etc. The Power

Rehabilitation Project (PRP) was commenced with financial assistance (US$ 250 million) from the World

Bank, African Development Bank, etc. mainly to rehabilitate and upgrade the three major hydropower

Coventry Street Substation in Lusaka 2 × 25 MVA 132/11 kV

(February 16, 2006)

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C Power Sector ―――――――――――――――――――――――――――――――――――――――――――

stations including part of the transmission lines and substations.

The Central Load Dispatching Center in Lusaka monitors and controls the operation of the National Grid.

In July 1996, the SCADA (Supervisory, Control and Data Acquisition) system was introduced in the

Central Load Dispatching Center, and four power stations and twenty substations are being monitored and

controlled. In addition to this system, the micro SCADA is also employed in Lusaka and Kitwe for detailed

monitoring and control, which enhances effective operation by shortening the duration of emergency

blackouts.

(5) Power Supply and Demand

As of February 2006, the available

capacity of ZESCO-owned power

stations was 1,400 MW; two 300 MW

units at the Kafue Gorge Hydropower

Station were not operating due to the

Power Rehabilitation Project (PRP).

Meanwhile, a peak load of 1,294 MW

was recorded in July 2004, and SAPP

forecasts a peak load of 1,374 MW in

2006/07. This means that the National

Grid’s present reserve margin is only

26 MW. According to the PRP schedule

provided by ZESCO, the Kariba North Bank Hydropower Station will be stopping one 150 MW unit in

August 2006, and the Kafue Gorge Hydropower Station will be stopping at least two 300 MW units in 2006.

In Kafue Gorge, two units should be rehabilitated at once as one main transformer per two units was

installed. This critical situation for power supply and demand will continue until June 2008 when PRP is

completed. The amount of electricity shortage due to PRP or low generation in the dry season will be

imported through SAPP or load shading will be carried out. If surplus electricity is expected, it will be

exported through SAPP. The import amount was 417 GWh in 2004/05, which is equivalent to 5% of the

total consumption in the same year, and 229 GWh in 2003/04, which is almost half of the following year’s

amount. This is imported mainly from South Africa, and the others from DRC and Zimbabwe. The export

amount was 188 GWh in 2004/05 and 491 GWh in 2003/04. Since the PRP continues to stop part of the

operation of the three major hydropower stations, the export amount decreases and the import amount

increases. The wheeling amount was 1,332 GWh in 2004/05.

Figure C-4 Peak load and power demand Source: Data from ZESCO Annual Report, 2005 and SAPP forecast

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

198

2/83

198

4/85

198

6/87

198

8/89

199

0/91

199

2/93

199

4/95

199

6/97

199

8/99

200

0/01

200

2/03

2004

/05

2006

/07

2008

/09

2010

/11

2012

/13

Ann

ual E

nerg

y S

ent O

ut (G

Wh)

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Max

. Dem

and

(MW

)

Eergy Sent Out (GWh) Forcasted Energy Sent Out (GWh)Max. Demand (MW) Forcasted Max. Demand (MW)

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Chapter 4 Sectoral Development Strategies ―――――――――――――――――――――――――――――――――――――――――――

The maximum peak load appears in June

or July during the dry season (from May

to September), as shown in Fig. C-5,

which presents the monthly peak load and

demand in the National Grid. During the

wet season, the peak load tends to

decrease. The peak load for 2004/05 in

the wet season is lower than that for

2003/04, which apparently resulted from

power outages due to PRP.

The total amount of ZESCO generation

output was 8,228 GWh in 2004/05.

ZESCO supplied 3,932 GWh to Copperbelt Energy Company (CEC) and 4,296 GWh to other consumers.

As shown in Fig. C-6, the amount of energy for CEC fluctuates depending on the market price of copper.

However, the amount of energy for other consumers has been increasing steadily, except in 2000/01 and

2001/02. The growth rate of supplied energy for other consumers exceeds 6% per year for these three years.

Power demand by sector and region is presented in

Figs. C-7 and C-8, respectively. According to

Fig. C-7, “Quarries” is the largest consumer, with

54% of the total consumption. “Domestic” is the

second largest, with 34%, and “Services” 6%.

Regarding Fig. C-8, the Copperbelt is the largest

consumer, with 63%. Lusaka is the second largest,

with 20%. The two regions have an 83% share of the

country’s total consumption, which means that

consumers are concentrated in the Copperbelt and

Lusaka.

ZESCO Retail Consumption by Sector in 2004/05

0.03%6%

34%54%

0.4%

4% 0.1%

1%1%

Agriculture Quarries Manufacturing Transport Commerce Domestic Services Construction Others

ZESCO Retail Consumption by Region in 2004/05

20.0%

8.4%

62.6%

9.0%

LusakaSouthernCopperbeltNorthern

Figure C-7 Energy consumption by sector Figure C-8 Energy consumption by region (GWh) (%) Source: Data from ZESCO Annual Report, 2005 Source: Data from ZESCO Annual Report, 2005

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1995

/96

1996

/97

1997

/98

1998

/99

1999

/20

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

Supp

lied

Ener

gy(G

Wh)

Bulk Supplies to CEC Bulk Supplies to ZESCO

Figure C-6 ZESCO supplied energy (GWh)Source: Data from ZESCO Annual Report, 2005

500

550

600

650

700

750

800

850

900

950

1,000

Apr

May

Jun Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Mon

thly

Ene

rgy

Sen

t Out

(GW

h)

200

400

600

800

1,000

1,200

1,400

Max

. Dem

and

(MW

)

04/05 Energy Sent Out (GWh) 03/04 Energy Sent Out (GWh)04/05 Peak Load (MW) 03/04 Peak Load (MW)

Figure C-5 Monthly peak load and demand Source: Data from ZESCO Annual Report, 2005

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C Power Sector ―――――――――――――――――――――――――――――――――――――――――――

(6) Power Development Plan

The three major hydropower stations will be upgraded by 210 MW, as shown below, after completion of

the Power Rehabilitation Project (PRP), which is being conducted with the assistance of the World Bank,

African Development Bank, etc. Completion of PRP is planned for June 2008.

Table C-2 Rehabilitation/Upgrading of 3 Major Hydropower Stations Station Before PRP After PRP Remarks

Kafue Gorge 900 MW (= 6 units × 150 MW)

990 MW (= 6 units × 165 MW)

2 units under rehabilitation to be completed in April 2006

Completion in December 2007 Kariba North 600 MW

(= 4 × 150) 720 MW

(= 4 × 180) Nos. 1 and 2 completed

No. 3 to be rehabilitated starting August 2006Completion in June 2008

Victoria Falls 108 MW (= 2 × 1 + 2 × 3 + 6 × 10 + 4 × 10)

108 MW (= 2 × 1 + 2 × 3 + 6 × 10 + 4

× 10)

Completed in March 2005

Total 1,608 MW 1,818 MW (Upgraded by 210 MW)

At present, three hydropower development plans, namely Kafue Gorge Lower (750 MW), Itezhitezhi

(120 MW) and Kariba North Bank Extension (360 MW) are on the table for ZESCO.

Kafue Gorge Lower (750 MW) Following the signing of the Memorandum of Understanding between Sinohydro and ZESCO for

cooperative development of Kafue Gorge Lower, the two parties have held several discussions. In order to

fine-tune the site selection of the reservoir, a study was commenced by the two parties to review the

previous feasibility study (1995) and determine the preferred site and maximum plant capacity. This study

was awarded to MWH Americas Inc. consultants in conjunction with ESCO.

Financial matters have so far been discussed with both Sinohydro and the China Export Import (EXIM)

Bank to reach an agreement on the funding modalities. The project is expected to be mainly financed by

EXIM (85%) while the balance (15%) would be raised internally by ZESCO. However, further discussions

on financing structure are to be held after completion of the study, which is scheduled for March 2006.

Various technical and financial matters are expected to be finalized and agreed upon, and the

Implementation Agreement signed before the end of this year.

The project cost is estimated at US $740 million and implementation is anticipated to take 4–5 years.

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Itezhitezhi (120 MW) In 2003, the Government approached the Islamic Republic of Iran about a partnership in developing hydro

potential in Zambia. To this affect, the Government allowed ZESCO to work with the FARAB Company of

Iran, and discussions were subsequently held between ZESCO and FARAB on technical, commercial and

financial matters for developing the project. This led to the signing of a Memorandum of Understanding

between ZESCO and FARAB in 2004. Discussions were then held with the Export Development Bank of

Iran (EDBI) who indicated their willingness to put up 85% of the financing for the power station with the

remaining 15% to be sourced elsewhere by ZESCO.

It is expected that technical and financial issues will be finalized soon (during the first quarter of this year)

so that an Implementation Agreement can be signed thereafter, paving the way to commencement of the

main works within this year. The project is expected to take 4 years and the cost is estimated at US$ 120 million.

Kariba North Bank Extension (360 MW) In 2003, the Government signed a Letter of Intent with Sinohydro of China to extend the Kariba North

Power Station in partnership with ZESCO. A feasibility study was prepared and submitted to ZESCO for

review by Sinohydro of China. Discussions on financial matters have been held with Sinohydro and the

EXIM Bank of China who has indicated their willingness to finance up to 85% of the project cost, with

ZESCO sourcing the remaining 15%. The financial terms were discussed with ZESCO and are presently

being reviewed. A meeting is planned soon for further discussions with EXIM on the financing details.

The project cost is estimated at US$ 300 million and is expected to take about 3.5–4 years.

At a meeting held in February 15, 2006, the Ministry of

Energy and Water Development (MEWD) stated their

desire to develop biomass energy as well as solar energy.

They have experience in rural electrification using SHS

(Solar Home System) for 400 households in the three

villages of the Eastern Province from 1999 to 2000 with

the assistance of the Swedish International Development

Cooperation Agency (SIDA). They have never been

involved in a biomass development project and have no

concrete plans. However, they have a development plan for a geothermal plant this year. For rural

electrification in the Northern Province, ZESCO plans to construct a distribution network in 2005/06 from

the geothermal plant (200 kVA) built by Italy in 1987 next to Lake Tanganyika in Nsumbu.

Although we could not confirm the existence of a Power Development Plan to be prepared by the MEWD

or ZESCO during our survey of February 2006, the Ministry provided the following project list for which

they expected assistance from the Japanese government.

Geothermal Plant in Nsumbu Source: ZESCO

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Table C-3 Projects Proposed for Japan ODA Project Name Information Obtained by Interviews

New Generation Project 1 Kabompo River Chikata Falls (3 MW) Possibly 10 MW 2 Chavuma Falls (15 MW) Possibly 20 MW 3 Kabompo Gorge (34 MW) 4 Luapula Hydro Development (950 MW) No priority set as it is on the border with Congo 5 Botoka Gorge (800 MW) on Zambezi River FS & DD finished by ZRA 6 Devils Gorge (800 MW) on Zambezi River No study 7 Manshya Falls (1 MW) Studied by UNIDO 8 Lufupa River (2.3 MW) Reconnaissance study completed 9 Lunga River, Mutanda (0.4 MW) Possibly 100 kW less 10 Luakela River, Sachibodo (0.6 MW) Possibly 150 kW less Rehabilitation of Old Generation Power Projects 11 Chishimba Mini-Hydro Station (6 MW) 12 Lunzuwa Mini-Hydro Station (0.75 MW) 13 Lusiwasi Power Station (12 MW) 14 Musonda Falls Power Station (5 MW) Rural Electrification Projects 15 Connection of Luangwa to the National Grid To benefit 19,000 people in Luangwa 16 Connection of Kaputa to the National Grid To benefit 88,000 people in Kaputa Biomass Project 17 Capacity building and awareness on production and use of biofuels (ethanol and biodiesel)

(7) Electricity Tariff

ZESCO has two tariff systems, regulated and non-regulated. As shown in the following Table C-4, the

regulated system is applied to residential (domestic), commercial, social service, agricultural, and industrial

consumers. The previous tariff was revised in May 2005, raising the cost for each consumer by 11%. This

system was approved by the Energy Regulation Board in accordance with the Electricity Act, Cap 433,

1995, 2003. The non-regulated system, in which the tariff can be negotiated prior to entering a contract, is

applied to bulk supply to mining companies and export to neighboring countries through high-voltage

interconnection lines, etc. For example, the tariff on bulk supply to Lumwana Mine from the ZESCO

substation through a 330 kV transmission line is now under negotiation with the owner, Equinox Company.

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Table C-4 Power Tariffs of ZESCO

ZESCO LIMITED REVISION OF ELECTRICITY TARIFFS

1. UNMETERED RESIDENTIAL TARIFFS Current Approved Tariffs Tariffs L1: Consumption up to 2 Amps Energy Charge/Month K 4,424.00 K 4,911.00 L2: Consumption between 2 –15 Amps Energy Charge/Month K 16,009.00 K 17,770.00 2. METERED RESIDENTIAL TARIFFS (Capacity 15 kVA) R1: Consumption up to 300 kWh Energy Charge/kWh K 63.00 K 70.00 R2: Consumption – 301 to 700 kWh Energy Charge/kWh K 90.00 K 100.00 R3: Consumption above 700 kWh Energy Charge/kWh K 147.00 K 163.00 Fixed Monthly Charge K 5,266.00 K 5,845.00 3. COMMERCIAL TARIFFS (Capacity 15 kVA) C1: Consumption Energy Charge/kWh K 147.00 K 163.00 Fixed Monthly Charge K 26,331.00 K 29,227.00 4. SOCIAL SERVICES TARIFFS Schools, Hospitals, Orphanages, Energy Charge/kWh K 122.00 K 135.00 Churches, Water Pumps, Street Lights Fixed Monthly Charge K 21,065.00 K 23,382.00 5. MAXIMUM DEMAND TARIFFS MD1: Capacity between 16–300 kVA MD Charge/kVA/Month K 6,255.00 K 6,943.00 Energy Charge/kWh K 90.00 K 100.00 Fixed Monthly Charge K 61,263.00 K 68,002.00 MD2: Capacity between 301–2000 kVA MD Charge/kVA/Month K 11,703.00 K 12,990.00 Energy Charge/kWh K 77.00 K 85.00 Fixed Monthly Charge K 122,525.00 K 136,003.00 MD3: Capacity between 2001–7500 kVA MD Charge/kVA/Month K 17,646.00 K 19,587.00 Energy Charge/kWh K 57.00 K 63.00 Fixed Monthly Charge K 245,050.00 K 272,006.00 MD4: Capacity above 7500 kVA MD Charge/kVA/Month K 17,744.00 K 19,696.00 Energy Charge/kWh K 47.00 K 52.00 Fixed Monthly Charge K 490,101.00 K 544,012.00 NOTE: The above tariffs do not include: (a) 5% Government Excise Duty (b) 17.5% Value Added Tax (VAT) May 1, 2005

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Figure C-9, which is based on ZESCO

presentation materials, shows average tariffs in

South African countries. The average for

residential, commercial, and industrial

consumers was calculated on the use of

900 kWh, 5,000 kWh, and at a load factor of

80% of 2,500 kVA, respectively. The average

tariff for residential, commercial, and

industrial consumers in Zambia is 3.1, 4.8, and

3.4¢/kWh, respectively, which is rather cheap

compared with the rates in other South African

countries.

(8) Technical Standards

Since 1997, ZESCO has been working to achieve standardization for stable and reliable power supply and

enhancement of services for consumers. Technical standards for transmission/distribution facilities and

electricity meters to be provided to consumers are based on the technical standards of the International

Electrotechnical Commission (IEC). Service manuals have also been prepared for speedy and efficient

consumer service. Everything has been computerized into the Business Information System (BIS), enabling

easy access on our computer screens.

(9) Capacity Development

As of March 2005, 3,722 people were employed at

ZESCO. In 2004/05, ZESCO sent 66 employees to attend

a local training course and 14 to attend courses in foreign

countries. In total, 405 employees participated in

workshops and seminars.

There are two training centers for ZESCO employees in

Zambia: the Kafue Gorge Regional Training Centre

(KGRTC) and the ZESCO Training Center (ZTC) in

Ndola. KGRTC is open to SADC member countries, and

participants can receive training mainly on the operation and maintenance of hydropower stations. The

Center has a simulator for hydropower station operations as well as training programs on the SCADA

system and GIS.

ZTC, which was established in 1970 for ZESCO employees in Ndola, provides training mainly on the

operation and maintenance of transmission and distribution facilities. The buildings and facilities for

training have already aged and suffered deterioration, adversely affecting some of the training programs.

0.000.020.040.060.080.100.120.140.160.18

Ango

la

Bots

wan

a

Keny

a

Mal

awi

Moz

ambi

que

Nam

ibia

Sou

th A

frica

Uga

nda

Zam

bia

Zim

babw

e

Ele

ctric

ity P

rice

(US

$/kW

h)

Domestic900kWh

Commercial5,000kWh

Industry2,500kVA@80%LF

Figure C-9 Average electricity tariffs in South African Countries

Source: Data from ZESCO presentation material

Kafue Gorge Regional Training Centre (February 17, 2006)

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ZESCO has developed a detailed plan for rehabilitating and updating the training programs at ZTC as one

of the PRP schemes. However, the budget has not yet been arranged because of unexpected excessive costs

for rehabilitating existing major hydropower stations in PRP.

(10) Environmental Impact Assessment System

The Environmental Council of Zambia (ECZ) was established under the Ministry of Environment and

Natural Resources, which is responsible for conservation of the country’s environment in accordance with

the Environmental Protection and Pollution Control Act, Cap 204, 1990. In 1997, the Environmental

Impact Assessment Regulation, 1997 (EIA Regulation) was enacted and a system was set up for assessing

development projects in Zambia. Moreover, several other laws and regulations were also enacted in relation

to national parks, wildlife, cultural heritage, agriculture, forestry, fishery, mines, water resources, etc. The

majority of developers of power projects are required by EIA Regulation to carry out an environmental

impact assessment. Developers should ask ECZ for approval to proceed with their projects following the

sequence below:

a. Before project implementation, developers shall prepare a Project Brief when projects are

categorized under the conditions designated in the EIA Regulation. The following are the

conditions related to power projects:

- Hydro power schemes and electrification

- Resettlement schemes

- Projects located in or near environmentally sensitive areas

b. After approval of the Project Brief, developers shall carry out a study for environmental impact

assessment when projects are categorized under the conditions designated in the EIA Regulation.

The terms of reference and experts for the study are subject to the approval of ECZ. Developers

shall compile the results of the study into an Environmental Impact Statement and submit it to

ECZ for approval.

The following are the conditions related to power projects:

Dams, Rivers, and Water Resources

- Dams and weirs covering a total area of 25 ha or more

- Exploration for, and use of, groundwater resources including production of geothermal energy

(water to be extracted to be more than 2 million cumecs (m3/s)).

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Electrical Infrastructure

- Electricity generation station

- Electrical transmission lines – 220 kV and more than 1 km long

- Surface roads for electrical and transmission lines more than 1 km long

According to the above conditions, most power projects will require an environmental

impact assessment, excluding short-distance or low-voltage transmission line projects,

distribution line projects, renewable energy projects, etc. unless the projects are located

within safe areas not specified by the EIA Regulation.

c. During and after project implementation, developers are required to monitor the environment in

and around their project area for a specified period.

The EIA Regulation obliges developers to disclose project information to inhabitants through mass media

and a public hearing, and to include at least one person in their study team who is a resident in the

potentially affected area. Moreover, the EIA Regulation includes a penalty clause whereby a developer who

violates the EIA Regulation shall be guilty of an offence and shall be liable, upon conviction, to fine or

imprisonment for a period not exceeding three years, or both.

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C-2 Current Problems and Issues

(1) Low Electrification Rate

Like many other sub-Sahara countries, Zambia is

heavily indebted and in financial difficulty. Zambia is

one of the low-level development countries in power

generation and transmission facilities, and

infrastructure. The principal reason for the low

electrification rate, less than 20% compared to the

present population, is the country’s poor financial

situation, and the following reasons are considered:

As it was made a priority to supply power to copper

mines, which is the main industry in Zambia and

occupies 90% of acquisition of foreign currency, the

development of power facilities has been centralized in

the Copperbelt. Power supply to the Copperbelt

occupies half of ZESCO’s total generation even now.

Zambia has a land area of 750,000 km2 and a population of 11 million. Therefore, the average population

density is rather low, i.e. 15 persons/km2. Fifty percent of the population lives in urban areas; thus, the

population density in rural areas is further below. The phenomenon of underpopulation is one of the

reasons for the delay in electrification in rural areas since the advantageous effect against investment is so

weak.

On the other hand, even though power supply started in the beginning of 1900, the electrification rate in

urban areas is still low. Presumably, with the rapid increase in urban population, distribution expansion

could not catch up to supply power to these new consumers because of a lack of transformer capacity.

Figure C-10 shows the fluctuation in population density by region. It can be seen in this figure that the

population of Lusaka and Copperbelt is soaring. The population density in Lusaka has increased by more

than 3% every year since 1990. Therefore, there is an unelectrified area even in the capital, Lusaka, as the

distribution network could not be constructed in time.

(2) Aging Power Generation Facilities

As shown in Table C-1, the power generation facilities in Zambia were constructed in the 1960s and 1970s,

and there are no power plants constructed after that time. Three hydropower plants and part of substation

facilities are under rehabilitation or planned to be upgraded through the ongoing PRP; however, most of the

small hydropower plants and transmission/distribution facilities are presumably maintained as is for a long

time. In particular, the small hydropower plant that was the independent power source at the time ZESCO

was established is very old. Therefore, it is necessary to survey the present condition of the plant and to

propose the necessary rehabilitation plan including low-voltage transmission lines.

0

10

20

30

40

50

60

70

Zam

bia

Cen

tral

Cop

perb

elt

Eas

tern

Luap

ula

Lusa

ka

Nor

ther

n

Nor

th-W

este

rn

Sou

thrn

Wes

tern

Den

sity

(pop

ulat

ion/

sq. k

m)

1969 1980 1990 2000

Figure C-10 Population density by region

Source: 2000 Census of Population and Housing

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(3) High Distribution Loss

ZESCO’s transmission and distribution losses in the year

2004/2005 were 2.9% and 18.1%, respectively. As shown

in Fig. C-11, the distribution loss seems to be decreasing;

however, it is still high.

According to ZESCO, most of the distribution loss is due to

non-technical reasons such as illegal power use, alteration

of meter devices and excessive use of electricity by flat-rate

power users. Supervisors conduct round-the-clock

surveillance to monitor illegal power use, and as a result

have contributed to reducing illegal use. ZESCO has also

introduced a prepaid card system for payment of electricity

charges and installed new electricity meter devices that accept prepaid cards to prevent the use of electricity

exceeding the charge paid. In the year 2002/2003, the experimental installation of prepaid system devices at

900 households in Lusaka showed good results for preventing illegal power use. Based on this experiment,

ZESCO implemented the US$ 2 million project last year to disseminate this new device.

On the other hand, technical loss has its roots in degradation of distribution facilities. Rehabilitation of

distribution facilities is expected to be conducted in series starting with the major cities.

Figure C-11 Transmission/distribution lossof ZESCO

Source: Data from ZESCO Annual Report, 2005

0

5

10

15

20

25

30

35

1998

/99

1999

/20

2000

/01

2001

/02

2002

/03

2003

/04

2004

/05

Loss

Rat

io (%

)

Transmission Losse Distribution Losse

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C-3 Policy for Power Development 5)

Presently, the Zambian Government is preparing a National Development Plan (NDP) in which each sector

is represented. We were informed during our survey in February 2006 that a draft of the power sector had

already been submitted to the Government and it would be released soon. The draft may have presented the

development plan to achieve the target set up in the Zambia Poverty Reduction Strategy Paper (PRSP),

2002-2004, which was developed under the guidance of the World Bank and the International Monetary

Fund in May 2002.

According to the PRSP, the development policy and strategy for the power sector are as follows:

(1) National policy for the energy sub-sector

a) Electricity: Increase accessibility in its use as well as the most cost-effective generating sites

for domestic and export markets.

b) New and Renewable Sources of Energy: Promote wider application of proven NRSE

technologies in meeting energy needs, particularly for remote areas.

(2) Programs in the energy sector

Programs in the energy sector to contribute to poverty reduction will aim at the following:

a) Electricity access rate from 20 to 35% by 2010: rural 15% and urban 50%

b) Increase in electricity exports to neighboring countries by 300% by 2010 from the current

level.

(3) PRSP strategies for poverty reduction in the energy sector

a) Enhancing the capacity of current energy delivery infrastructure through rehabilitation

and/or refurbishment to ensure reliable and effective supply, and to ensure access by more

people.

[The Power Rehabilitation Project has been implemented since 1998 in line with this

strategy.]

b) Creating new energy delivery infrastructure through, for example, building new power

stations, transmission lines, etc. to cater to increased domestic demand and export.

[Three hydropower development projects are being planned and financial negotiation is

ongoing with private investors from China and Iran. International interconnection

projects extending to Tanzania by 300 kV with 700 km length, and to DRC are being

planned.]

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C-4 Proposed Project

From the results of this study, the following power sector projects are proposed for implementation:

At present, the power output from the three major hydropower plants occupies 98% of the total installed

capacity of Zambia, and these plants are now under rehabilitation and repowering works through the Power

Rehabilitation Project (PRP).

Completion of the works are scheduled for June 2008. Some transmission and distribution line facilities are

being rehabilitated by the same project; however, many other existing transmission and distribution lines

still remain unrehabilitated.

Therefore, there is a possibility that even after completion of the PRP, the electricity generated cannot be

transmitted and/or distributed. To deliver 100% of the power generated from the three major hydropower

plants to the end consumers, it is crucial to implement the following rehabilitation projects, i.e. (1) to (5),

and conduct related maintenance training for rehabilitation and reinforcement of the existing transmission

and distribution lines.

On the other hand, it is presumed that the expansion of power generation facilities is mainly on hydropower

plants; however, it is also important to prepare a development road map considering power trade with

neighboring countries through SAPP, with efficient and effective implementation. Although ZESCO

developed a power system master plan study in 1993, it should be updated considering Zambia’s change in

circumstances since that time. Economic growth has been remarkable and SAPP has become active as they

introduced the Short-Term Energy Market in 2001. Moreover, in that study, hydropower potential was

reviewed based only on previous studies. For these reasons, the power development master plan as

explained in Item (6) below should be prepared as soon as possible so that this master plan would be the

development indicator.

(1) Rehabilitation and Reinforcement Works of Distribution Networks in Lusaka and Surrounding

Area

The population in Lusaka has increased significantly and urbanization is progressing. However, the

distribution facilities are deteriorating and their capacity is not sufficient for expansion of distribution lines

presently underway.

Effective electrification in the densely populated urban area will lead to the uplift of cultural level through

television and radio, and contribute to improved security in the downtown area, expansion of irrigation

through pumping of water to the surrounding agricultural land and development of small- and

medium-scale businesses. This project conforms to the National Policy to improve the electrification rate,

increase food production and encourage new industry, and the necessity for urgent implementation is

considered to be high.

(2) Rehabilitation and Reinforcement Works of Livingstone Distribution Network

Livingstone is located near Victoria Falls, one of the three largest cataracts in the world and an important

base for tourism with hotels and lodgings for visitors from the Zambia side. Power distribution to the city

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has been supported by two 10 MVA transformer units; however, one of the transformers recently broke

down. Therefore, the power supply in Livingstone has become severe with frequent rolling brownouts. The

single remaining transformer cannot stop operating to undergo maintenance since there is no spare.

Furthermore, most of the 11 kV distribution line is under the ground; thus, maintenance is difficult and

damage to the line is severe, resulting in frequent line failure. As reliable power supply is most important

for a tourist town, rehabilitation and restoration are urgently required.

(3) Rehabilitation and Reinforcement Works of Power Generation Facilities and Network in

Eastern Province

The Eastern Province is a fertile farm belt for irrigation agriculture if stable power supply can be assured.

In this respect, it is an important region in view of food security, as propagandized by the Zambian

government. However, the power facilities in the Eastern Province were built more than 40 years ago, and

blackouts occur quite often. Maintenance costs for the old facilities are soaring and there is also a lack of

spare parts. The small Lusiwasi Hydropower Station (12 MW), which is ZESCO’s 4th biggest hydropower

station and connected to the National Grid, is also quite old as it dates back to 1970. It has no spare parts

either, and one of its four units is malfunctioning. To increase food production by supplying stable power

for irrigation facilities, it is extremely urgent to rehabilitate and upgrade the power plant and related

transmission/distribution network.

(4) Rehabilitation and Reinforcement Works for Copperbelt Distribution Facilities

Ndola and Kitwe, located in the Copperbelt, are the 2nd and 3rd largest cities after Lusaka, respectively.

There are many copper mines nearby, which is the basic industry in Zambia; therefore, these cities

developed a long time ago with the development of copper mining. The lifespan of the distribution network

in both cities has expired; therefore, rehabilitation is required. In addition, with the increase of population

and urbanization, the substation capacity is no longer sufficient. Therefore, rehabilitation and expansion of

substation facilities are also required. As the 330 kV trunk line supplying power to the copper mines in the

Copperbelt passes through both cities, installation of the SCADA system is recommended for the substation.

With the introduction of the system, strict monitoring and control from Lusaka would be easier, and would

improve the reliability of power supply.

(5) Rehabilitation and Expansion Works for ZESCO Training Center in Ndola

The ZESCO Training Center(ZTC)for ZESCO employees opened in 1970 in Ndola, which is one of the

major cities in the Copperbelt.

ZTC provides training mainly on maintenance technology for transmission and distribution lines. The

training center, which was originally a farmhouse, is very old and has an adverse effect on the training

program. As part of PRP, an American consultant prepared detailed plans for repair of the training center,

improvement of the training program and renewal of the training facilities. Based on this, ZESCO decided

to implement the scheme in 2003; however, a lack of funds has stalled the project. ZESCO is under

pressure to disseminate the maintenance and operation technology of the new facilities introduced by PRP.

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On the other hand, ZESCO has its own rehabilitation plan for transmission/distribution lines. Therefore, the

training of technical staff has become an urgent task. The ZTC training facilities and program are

out-of-date now, and renewal of the facilities and program is required in addition to repair of the training

center building.

(6) Power Development Master Plan in Zambia

To increase the power supply to domestic consumers and the export of power to neighboring countries to

acquire foreign currency, the development of generation sources shall be steadily implemented. Zambia has

abundant water resources; therefore, the main development target is presumably hydropower. It is

recommended that the hydropower potential of the entire country be studied for the efficient and effective

development of water resources. Additionally, the power development master plan shall be formulated

based on the power demand forecast considering the expansion of the transmission line network in Zambia,

rural electrification and SAPP trends.


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