PRESENTATION TO EAZ

LOAD-SHEDDING IN ZAMBIA:WHAT SHOULD BE THE PLAN

PRESENTED BY C CHITUNDU

MANAGING DIRECTOR

PRESENTATION OVERVIEW

1.0 BACKGROUND

2.0 CURRENT STATUS

3.0 ZESCO’S PLANS TO END LOAD-SHEDDING

3.1 GENERATION PROJECTS

3.2 TRANSMISSION PROJECTS

3.3 DISTRIBUTION PROJECTS

3.4 OTHER INITIATIVES TO REDUCE LOAD-SHEDDING

4.0 CONCLUSION

BACKGROUND

• ELECTRICITY IS A KEY DRIVER OF ECONOMIC GROWTH & MAJOR

INPUT IN ALL ECONOMIC SECTORS - AGRICULTURE, MINING,

MANUFACTURING AND TOURISM

• ZESCO’S ELECTRICITY GENERATING CAPACITY STANDS AT 2.2 GW

(99% HYDRO)

• NET EXPORTS ROUGHLY 5% OF TOTAL GENERATION (MOSTLY TO

NAMIBIA, BOTSWANA AND CONGO D.R.)

• CURRENT PEAK DEMAND FOR ELECTRICITY BARELY MEETS

GENERATION CAPACITY ESPECIALLY DURING PEAK TIMES

•

BACKGROUND CONT’D

• ZAMBIA HAS EXPERIENCED A SUSTAINABLE

ECONOMIC GROWTH OVER THE LAST FIVE YEARS

DESPITE GLOBAL RECESSION, RESULTING IN:

• INCREASED DEMAND FOR ELECTRICITY FROM ALL

SECTORS

• DEMAND OUTSTRIPPING AVAILABLE CAPACITY

DURING PEAK HOURS

• ZESCO MUST INVEST IN NEW INFRASTRUCTURE TO

COPE WITH GROWING DEMAND

BACKGROUND CONT’D

• HOWEVER DELAYED INVESTMENT IN GENERATION PLANTS HAS NOT MATCHED THE LOAD GROWTH• RESULTING IN DEFICIT IN POWER GENERATION CAPACITY

• FURTHER, DELAYED INVESTMENTS IN TRANSMISSION & DISTRIBUTION SYSTEMS HAS ALSO LED TO DEPLETING POWER TRANSMISSION & DISTRIBUTION CAPACITY

• ABOVE FACTORS LARGELY CONTRIBUTE TO LOAD-SHEDDING

• LOAD-SHEDDING IS DONE TO SAFEGUARD THE ELECTRICITY INFRASTRUCTURE

GENERATION STATUSPOWER STATION INSTALLED

CAPACITY (MW)

AVAILABLE CAPACITY (MW)

ZESCOKAFUE GORGE PS 990 960

KARIBA NORTH BANK PS 720 705

VICTORIA FALLS PS 108 103

SMALL HYDROS 13 10

KNBE 360 360

LUSIWASI 12 5

IPPsLUNSEMFWA 50 20

NDOLA HFO PLANT 50 48

TOTAL 2,303 2,211

GENERATION STATUS CONT’D

• THE TOTAL AVAILABLE CAPACITY IS 2,211 AGAINST A MAXIMUM NATIONAL DEMAND OF 1890.

• ZESCO HAS ADEQUATE CAPACITY TO MEET THE DEMAND AT PRESENT. LOAD-SHEDDING IS THEREFORE DUE TO BOTTLENECKS IN THE TRANSMISSION AND DISTRIBUTION INFRASTRUCTURE.

PROJECTED DEMAND

ELECTRICITY DEMAND

8

0

500

1000

1500

2000

2500

3000

MW

Years

Demand Forecast for Zambia

Demand

PROJECTED DEMAND CONT’D

• FROM THE GRAPH IT CAN BE SEEN THAT UNLESS THE PLANNED GENERATION PROJECTS COME ON STREAM, THERE WILL BE A GENERATION DEFICIT IN THE COMING YEARS.

• DAILY CONNECTION RATE: 300

• PENDING BACKLOG IN CONSTRUCTION AND NEW CONNECTIONS TO DATE: 20,000

PROJECTED GENERATION DEFICITS

Year 2008 2010 2015 2020 2025

FORECAST MAXIMUM DEMAND (MW) 1,579 1,592 2,389 2,595 3,029

FORECAST SHORTFALL(MW) 547 753 1,179

SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

GENERATION

REHABILITATION AND UPRATING OF THE THREE MAJOR HYDROPOWER STATIONS, I.E. KAFUE GORGE, KNBPS AND VICTORIA FALLS

VICTORIA FALLS POWER STATION – USD53.7MILLION

KAFUE GORGE POWER STATION - USD 85.5 MILLION

KARIBA NORTH BANK POWER STATION – USD81.4MILLION

THROUGH THE UPRATING OF KARIBA AND KAFUE GORGE 210MW WAS GAINED

TOTAL COST OF THE UPGRADE– USD 100 MILLION

ESTIMATED COST FOR A 210MW NEW HYDRO POWER STATION

– ABOVE US$600MILLION

GENERATION PROJECTSPOWER REHABILITATION PROJECT (PRP)

SCOPE INCLUDED REHABILITATION AND UPRATING OF THE THREE MAJOR HYDROPOWER STATIONS, I.E. KAFUE GORGE, KNBPS AND VICTORIA FALLS

OTHER WORKS INCLUDED REINFORCEMENT AND REHABILITATION OF SOME TRANSMISSION AND DISTRIBUTION INFRASTRUCTURE

THE MAJOR ACHIEVEMENTS OF THE PRP HAS BEEN THE UPRATING OF THE KAFUE GORGE POWER STATION FROM 900 TO 990 MW, THE REINSTATING OF THE VICTORIA FALLS POWER STATION TO ITS FULL GENERATING CAPACITY OF 108 MW AS WELL AS THE UP-RATING OF KARIBA NORTH BANK POWER STATION FROM 600 MW TO 720 MW. THE TOTAL GENERATION CAPACITY YIELDED FROM THE PRP IS 210 MW

SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

GENERATIONCONSTRUCTING & COMISSIONING OF THE 360 MW

KARIBA NORTH BANK EXTENSION PLANT.LOAD-SHEDDING USUALLY DONE AT PEAK TIMES, KNBE

CONSTRUCTED AS A PEAKING STATION TO MEET THE PEAK CAPACITY SHORTFALLS

KNBE PROJECT- OUTFALL TOWER WORKS

15

UNIT # 6 SPIRAL CASING - PREPARATIONS FOR WATER PRESSURE TESTING

NEW GENERATION PROJECTS

ITEZHI TEZHI HYDROPOWER PROJECT (120 MW)

Owner PPP (ZESCO/TATA)

Cost (Millions of US Dollars) 232

Duration (Years) 3.5

Operation 2015

Status 48% completed

ITEZHI TEZHI HYDROPOWER PROJECT

NEW GENERATION PROJECTS-SMALL HYDROS SHIWANG’ANDU 1 MW – USD4.15 MILLION COMPLETED IN 2012

NEW GENERATION PROJECTS-SMALL HYDROS

LUNZUA-15MW-US$52M- COMMISSIONING OF UNIT 1 SCHEDULED FOR END AUGUST 2014.

19

LUNZUA PROJECT

LUNZUA-15MW-US$52M- COMMISSIONING OF UNIT 1 SCHEDULED FOR END AUGUST 2014.

20

NEW GENERATION PROJECTS-SMALL HYDROS

LUSIWASI UPPER -15MW-US$47M AWAITS SITE INVESTIGATIONS, AWARD OF CONTRACT, PROJECT

FINANCING

REHABILITATION AND UPRATING OF CHISHIMBA FALLS: 6 -14.8MW – US$46M

PREPARATION BID DOCUMENTS IN PROGRESS, AWARD OF CONTRACT, PROJECT FINANCING

REHABILITATION AND UPRATING OF MUSONDA FALLS: 5-10MW – US$32M

CONTRACT AWARDED, ADVANCE PAYMENT MADE TO EPC CONTRACTOR, PROJECT FINANCING. WORKS TO CONCLUDE IN 2016

NEW GENERATION PROJECTS-SMALL HYDROS

MUJILA FALLS 1.4MW-US$25M

75% OF PREPARATORY WORKS DONE. PROJECT COMPLETION EXPECTED 2017.

LUSIWASI LOWER -86MW-US$164 EPC CONTRACT AWARDED BUT CANCELLED DUE TO POOR

PERFORMANCE RECORD

22

NEW GENERATION PROJECTS

KAFUE GORGE LOWER HYDROPOWER PROJECT (750 MW)

• OWNER:PPP (ZESCO/SINOHYDRO)

• COST:USD 2 BILLION

• DURATION: 6 YEARS

• OPERATION: 2019

• STATUS: PROJECT PREPARATORY ACTIVITIES UNDERWAY. CONSULTANTS ARE BEING HIRED. DISCUSSIONS WITH FINANCIERS UNDERWAY.

• GRZ HAS ALLOCATED US$ 186 M (ZMK930 TR) FROM THE EURO BOND FOR THE KGL PROJECT AS PARTIAL EQUITY CONTRIBUTION

OTHER SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

GENERATION

CONTRACTING OF THE 50MW FROM NDOLA ENERGY. COMMERCIALLY AVAILABLE.

CONTRACTING OF THE 300MW FROM MAAMBA COLLIERIES TO BE AVAILABLE IN 2015

NEW GENERATION PROJECTS – POTENTIAL SITES

MPATA GORGE – 540 MW DEVIL’S GORGE – 500 MW BATOKA GORGE – 800 MW MUMBOTUTA FALLS - 300 MW MAMBILIMA FALLS SITE I – 202 MW MAMBILIMA FALLS SITE I – 124 MW KABWELUME FALLS - 62 MW KUNDABWIKA FALLS – 101 MW MUTINONDO - 40 MW LUCHENENE – 30 MW MKUSHI – 65 MW

TRANSMISSION PROJECTS ONGOING

CONNECTION OF NORTH WESTERN PROVINCE TO NATIONAL GRID

THE OBJECTIVE IS TO SUPPORT THE INCREASED ACCESS TO ELECTRICITY AND IMPROVED QUALITY OF SERVICE BY DISPLACING THE EXPENSIVE DIESEL GENERATORS

COST: APPX. USD150 MILLION

FUNDING: SECURED FROM NORDEA BANK (SWEDEN)

STATUS: CONTRACT AWARDED TO EL TEL, NOW MOBILIZING TO SITE. DESIGN WORKS IN PROGRESS.

CONSTRUCTION PERIOD 24 MONTHS. COMMISSIONING APRIL 2016

26

TRANSMISSION PROJECTS ONGOING

KARIBA NORTH BANK EXTENSION POWER EVACUATION PROJECT

THE OBJECTIVE IS TO INCREASE TRANSMISSION CAPACITY FROM KNBPS TO THE GRID FOR THE EVACUATION OF POWER FROM KNBE PROJECT

COST: USD62 MILLION

STATUS: EPC CONTRACTOR IS SINOHYDRO, TOWER ERECTION AND CONDUCTOR STRINGING ARE IN PROGRESS.

CONSTRUCTION PERIOD: 18 MONTHS, PROJECT HAS HOWEVER BEEN DELAYED.

27

TRANSMISSION PROJECTS ONGOING

KAFUE TOWN MUZUMA VICTORIA FALLS TRANSMISSION LINE UPGRADE

THE OBJECTIVE IS TO INCREASE TRANSMISSION CAPACITY SOUTHWARDS FOR EXPORT TO AND FROM SAPP AND PROVIDE EVACUATION PATH FOR NEW GENERATION PROJECTS

SCOPE: UPGRADE 348 KM OF 220 KV LINE TO 330 KV

COST: USD100 MILLION

STATUS: PROCUREMENT PROCESS ALMOST COMPLETE

FUNDING: WORLD BANK AND EUROPEAN INVESTMENT BANK

CONSTRUCTION PERIOD: 18 MONTHS28

OTHER TRANSMISSION PROJECTS ONGOING

PENSULO KASAMA AND PENSULO CHIPATA 330 KV PROJECT

THE OBJECTIVE IS TO IMPROVE POWER QUALITY IN EASTERN, MUCHINGA, NORTHERN AND LUAPULA PROVINCES AND TO INCREASE TRANSMISSION CAPACITY TO THESE AREAS

COST: USD335 MILLION CONSTRUCTION PERIOD: 30 MONTHS FROM AUGUST 2012

TRANSMISSION PROJECTS ONGOING

ITT MUMBWA LUSAKA WEST TRANSMISSION LINE PROJECT

THE OBJECTIVE IS TO PROVIDE POWER EVACUATION FOR THE ITT POWER STATION

COST: USD133 MILLION

FUNDING: EIB, AFDB AND AFD

STATUS: EPC PROCUREMENT PROCESS FOR SUBSTATION AND TRANSMISSION LINE COMPLETE.

CONSTRUCTION PERIOD: 18 MONTHS

30

TRANSMISSION PROJECTS ONGOING

SUPPLY TO KALUMBILA MINE

THE OBJECTIVE IS TO SUPPLY POWER TO THE PROPOSED FQM KALUMBILA MINE

SCOPE: 400KM OF 330 KV DOUBLE CIRCUIT LINE AND 66 KM OF 330 KV SINGLE CIRCUIT LINE AND ASSOCIATED SUBSTATION AT KALUMBILA

COST: USD300 MILLION

STATUS: TRANSMISSION LINE AND SUBSTATION WORKS IN PROGRESS

CONSTRUCTION PERIOD: COMMISSIONING IS EXPECTED END OF 2015 31

OTHER TRANSMISSION PROJECTS ONGOING

CONNECTION OF LUANGWA DISTRICT TO THE GRID

THE OBJECTIVE IS TO SUPPORT THE INCREASED ACCESS TO ELECTRICITY AND IMPROVED QUALITY OF SERVICE BY DISPLACING THE EXPENSIVE DIESEL GENERATORS

COST; USD63MILLION

STATUS: CONSTRUCTION WORKS ARE IN PROGRESS.

CONSTRUCTION PERIOD: COMMISSIONING IS EXPECTED DECEMBER 2014

32

TRANSMISSION PROJECTS ONGOING

LUSAKA TRANSMISSION & DISTRIBUTION REHABILITATION AND UPGRADING PROJECT

THE OBJECTIVE IS TO INCREASE THE TRANSMISSION CAPACITY OF THE LUSAKA TRANSMISSION AND DISTRIBUTION NETWORK

COST: USD210MILLION

FUNDING: WORLD BANK, EUROPEAN INVESTMENT BANK AND ZESCO LIMITED

STATUS: FINANCING BY WB, EIB. GOING THROUGH THE PROCESS.

CONSTRUCTION PERIOD: COMPLETION EXPECTED BY 201833

FUTURE TRANSMISSION PROJECTSZIZABONA THE OBJECTIVE IS TO INCREASE REGIONAL TRADE IN POWER BY INCREASING

TRANSMISSION CAPACITY FOR NORTH TO SOUTH AND EAST TO WEST POWER TRADING

PROJECT PROMOTED BY ZIMBABWE, ZAMBIA, BOTSWANA AND NAMIBIA

COST: USD230MILLION

FUNDING: DISCUSSIONS ONGOING WITH POTENTIAL FINANCIERS. DBSA, AFDB, KFW

STATUS: TECHNICAL AND MARKET STUDIES COMPLETED, PROJECT GOVERNANCE DOCUMENTS PREPARED

IUMOU, IGMOU SIGNED. JOINT DEVELOPMENT AGREEMENT TO BE SIGNED BY BPC. WILL LEAD TO SIGNING OF SHAREHOLDERS AGREEMENT

CONSULTANT ENGAGED AND SPV REGISTRATION IS UNDERWAY

CONSTRUCTION PERIOD: COMMISSIONING IS EXPECTED BY 201734

SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING TRANSMISSION PROJECTS

UPGRADING (RE-CONDUCTORING) OF LUSAKA 132 KV

SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

MEASURES TO INCREASE TRANSMISSION CAPACITIES:INSTALLATION OF A SECOND 125 MVA 330/132 KV

TRANSFORMER AT LUSAKA WEST TO SUPPORT 132 KV SYSTEM. (COMPLETED IN 2012)

UPGRADE OF MAZABUKA SUBSTATION COMPLETED IN 2012INSTALLATION OF COMPENSATION EQUIPMENT IN THE

COPPERBELT

SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING –DISTRIBUTION PROJECTS

DISTRIBUTION PROJECTS UNDER INCREASED ACCESS TO ELECTRICITY SERVICES.

SPONSORED BY WB, JICA AND OTHER FINANCIERS IN PROGRESS. PROJECT COST US$75MILLION

IAES –PROJECTS STATUSProject Name Project Description Project Cost

(USD)Project Status

Kanyama SubstationZESCO/IAES/W/002/ 12

Design, Supply & Installation of Kanyama 2 x 16/25MVA 33/11kV S/S in Lusaka

3,406,018.75

.Overall Progress 98%

Livingstone’s Lusaka Rd SubstationZESCO/IAES/W/001/ 12

Design, Supply & Installation of Lusaka Rd 2 X 15/20MVA 33/11kV S/S in Livingstone

4,020,411.00

Overall Progress 98%

Grid Reinforcement - IAES Procurement of and Works to Install Reinforcement Transformers at Roma 132/11kV; Figtree132(88)/33kV; Chibombo 132(88)/33kV Substations

12,637,654.52

Overall Progress 20%

Garden, Kanyama, Misisi Township Electrification (Integrated Approach)

Integrated Approach to Electrification in Garden, Kanyama & Misisi Townships

1,824,940.00

Progress 40%.

Intensification Works in the Copperbelt Region ZESCO/IAES/002/ 12

Construction of Total 32km of 11kV of lines, 39x200kVA,11/0.4kV Tx’s ; 45km of 400V lines and service connection (Intensification Works) in the Copperbelt Region ( ie Kabushi,Chipulukusu,New Kawama & Chibolya)

2,781,965.66

75% progress

Grid Extension Works in the Northern Region ZESCO/IAES/001/ 12

Construction of Total of 30km x 11kV and 8x200kVA,11/0.4kV Tx’s; 37km of 33kV Lines, 23x50kVA,33/0,4kV Tx’s and service connection (Grid Extension Works) in the Northern Region (ie Lukulu,Ipusukilo mission & Lukulu farm block)

2,315,061.76

Construction of lines is underway, with 80% progress

New Distribution Lines ZESCO/IAES/JICA/001/11

Construction of Distribution Lines in KapiriMposhi & Mumbwa; Azele1 & Lundazi; Mbereshi 1&2; Isoka1 & Luwingu; Vic Falls & Mazabuka; Senanga & Mongu; Mujila Falls Lower P/S

12,781,965

Construction of lines is underway, with 80% progress

Grid Extension Works in the Central Region ZESCO/IAES/W/008/12

Construction of Grid Extension lines in Central Region covering Mukonchi and Mangango

8,111,772.84

Line Surveys, Bush-clearing and pole pegging completed, in readiness for construction.

SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

NEW KANYAMA SUBSTATION

SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

WAYLEAVE ENCROACHMENT -NEW KANYAMA SUBSTATIONINCOMPLETE LINE

SHORT TERM MEASURES TAKEN TO REDUCE LOAD-SHEDDING

EUROBOND PROJECTS IN LUSAKA, KITWE AND NDOLA – COMMISSIONING TO START BY AUGUST 2014

PROJECT COST USD 69 MILLIONOVER 60% OF FUNDS ALREADY COMMITTED

DERP PROJECTS STATUS

Name of the project Scope of Work Project Status Progress Expected Commissioning

New Chalala 33/11kV Substation

Chalala 33/11kV new Substation with two 33/11kV 26 MVA TXs

Civil works completed. Installation in progress 98% August , 2014

Rehabilitation of Water Works 33kV busbarCivil works for half busbar completed & electrical works in progress for half

busbar.50% August , 2014

Rehabilitation of 33kV waterworks bay 1 at Woodland Sub

Civil works completed & electro-mechanical works snagging completed

33kV OHL, 18kM & 11kV OHL, 5kMErection and stringing work in

progress 95% August, 2014

New Bonaventure 33/11kV Substation

Bonaventure 33/11 KV new Substation with two 33/11 kV 26 MVA T/Fs

Civil works completed. Installation in progress 94% August, 2014

Rehabilitation of Chilanga 33kV busbar Civil & installation works in progress 80% August, 2014

33kV OHL, 25kM and 11kV OHL, 5kMErection and stringing work in

progress 98% July, 2014

Upgrade 33kV switchgear at Lusaka West Sub

new 33kV outdoor Switching Station Civil & electrical works in progress. 93% & 86% September, 2014

Chongwe 88/33kV Sub upgrade

Rehabilitation of Chongwe 88 / 33kV Substation and install 132/ 88/ 33kV, 52 MVA TXs

Civil works completed. Installation in progress. 90% September, 2014

Upgrade of 33kV switchgear at

Liverpool SubstationNew 33kV indoor GIS Switchgear Civil & electrical works snagging completed

Construction of two new Substations and

66kV transmission lines

New Scaw 66 /11kV Substation with two 66/11 kV 40 MVA TXs Civil & electrical works in progress. 97% & 72% September, 2014

New Mwambashi 66 /33kV Substation with two 66/33kV 26 MVA TXs Civil & electrical works in progress. 97% & 80% September, 2014

New 14kM 66kV transmission line from Chambishi Copper Smelter Sub to Mwambashi Sub

Civil & installation works in progress. 84% December, 2014New 28kM 66kV transmission line from Mwambashi Sub to New SCAW Sub

DERP PROJECTS STATUS CONT’D

Reinforce Makeni, Matero,

Chelstone, Kabulonga & L85

Substations

Chelstone 33/11kV new Substation with two 33/11kV 26 MVA TXs

Civil works, Installation & Testing and

Commissioning completed.

snagging completed

Kabulonga 33/11kV new Substation with two 33/11kV 26 MVA TXs

Civil, Installation, Testing & Commissioning

completed. snagging completed

Reinforce Makeni, Matero,

Chelstone, Kabulonga & L85

Substations

L85 33/11kV new Substation with two 33/11kV 26 MVA TXs

Civil & electrical works in progress. 99% & 94% August, 2014

Rehabilitation of Makeni and add two 33/11kV 26 MVA TXs

Civil works completed. Installation in progress. 99% & 98% August , 2014

Rehabilitation of Matero and add two 33/11kV 40 MVA TXs

Civil & electrical works in progress. snagging completed

Reinforcement of supply at Ndeke

Village in Mufulira

New 66/11kV Substation with two 66/11kV ,26 MVA TXs

Civil & Installation works in progress. 95% & 80% September ,

2014

New 24kM 66kV transmission line from Chambishi Copper Smelter and 10kM of 11kV OHL

Civil & installation works in progress. 85% December, 2014

Reinforcement of supply in Chongwe town

33/11 kV new Substation with two 33/11 kV 26 MVA TXs

Civil works completed. Installation in progress 98% August, 2014

33kV OHL, 25kM , and 11kV OHL, 5 KM 33kV & 11kV installation in progress 97% July, 2014

NEW KABULONGA SUBSTATION UNDER DERP

11KV BOARD AT KABULONGA SUBSTATION

PLANNED CAPITAL INVESTMENT 2014

ZESCO PLANS TO SPEND ZMK 5,634BN ON ASSETS AND INFRASTRUCTURE DEVELOPMENT IN 2014

OVER 45% ALREADY UTILIZED

PLANNED CAPITAL INVESTMENT (BREAKDOWN)

STRATEGIC BUSINESS UNIT

2014 CAPITAL EXPENDITURE

(ZMK’000)

GENERATION 1,342,371

TRANSMISSION 2,913,348

DISTRIBUTION 1,198,500

CORPORATE 179,898

TOTAL 5,634,117

TARIFFS IN THE REGIONCOUNTRY AVERAGE RETAIL TARIFF US$ CENTS/KWHTANZANIA 8.2

SWAZILAND 11.50

ZIMBABWE

9.80

SOUTH AFRICA

8.70

NAMIBIA

8.60

MOZAMBIQUE

7.50

BOTSWANA

7.00

MALAWI

6.80

ANGOLA

6.00 ZAMBIA 6.00

IPPS AND THEIR CAPACITIESGENERATION SOURCE CAPACITY MW ENERGY (MWH)

KNBE 360 488,978

ITPC 120 506,289

KGL 750 2,761,905

NDOLA ENERGY (HFO) 50 438,000

Maamba Collieries Ltd 300 2,362,205

EMCO 300 2,022,472

TOTAL 1880 8,579,849

ZESCO REVENUE DEFICITS DUE TO PRICE DIFFERENTIALS ON IPPS

DESCRIPTION USc/ KWH REVENUE (US$)

AVERAGE TARIFF - IPPs 12.75 883.7M

AVERAGE SELLING TARIFF 6.02 516.5M

TARIFF DIFERENTIAL 6.73 367.2M

REVENUE LOSS (US$ ) 367.2M

POWER PURCHASE AGREEMENTS WITH INDEPENDENT POWER PRODUCERS

TO ENSURE LOAD SHEDDING IS MINIMIZED ZESCO HAS CONTRACTED POWER FROM IPPS AT HIGHER COST COMPARED TO THE PREVAILING TARIFFS ON THE MARKET.

AVEARGE TARIFF USC/KWH -6.02

ANNUAL LOSS OF 367 MILLION USD

REASONS FOR LIMITED INVESTMENTS IN THE ELECTRICITY SECTOR

THE ELECTRICITY ENERGY SECTOR IN ZAMBIA HAS SUFFEREED LITTLE OR NO INVESTMENT DESPITE GOVERNMENTS INITIATIVE TO HAVE THE INDUSTRY DEREGULATED DUE TO LARGELY:

NON COST REFLECTIVE TARIFF LACK OF WILLINGNESS FROM CUSTOMERS TO PAY COST REFLECTIVE

TARIFFS

ZAMBIA HAS THE LOWEST TARIFFS IN THE REGION.

52

POWER PURCHASE AGREEMENTS WITH INDEPENDENT POWER PRODUCERS

DUE TO THE UNATTRACTIVE TARIFFS, THE ZAMBIAN ELECTRICITY SECTOR IS LARGELY DOMINATED BY ZESCO –SINGLE BUYER MODEL.

SOLAR ENERGY OPTION

• SOLAR ENERGY CAN ONLY BE HARNESSED WHEN IT IS DAYTIME AND SUNNY.

• LESS EFFICIENT AND COSTLY EQUIPMENT (EFFICIENCY FOR MOST PANELS BETWEEN 17-20%)

• RELIABILITY DEPENDS ON LOCATION, CLIMATE, POLLUTION E.T.C

• ENVIRONMENTAL IMPACT OF PV CELL PRODUCTION

• REQUIRES LARGE TRACTS OF LAND FOR SOLAR PANELS AND BATTERIES

• NO FEED-IN TARIFF IN PLACE –MUST BE DEVELOPED BY MEMWD AND ERB

SOLAR ENERGY OPTION

• COST OF SOLAR ENERGY VERY HIGH

• EXAMPLE TO PROCURE AND INSTALL A 25KWP IT COSTED ZESCO ABOUT

USD 300,000

OTHER INITIATIVES TO REDUCE LOAD-SHEDDING

• POWER PLANTS WILL TAKE TIME TO COME ON BOARD

• THEREFORE ZESCO MANAGEMENT STEPPED UP DSM ACTIVITIES TO ACCELERATE ENERGY EFFICIENCY INITIATIVES

• ENERGY SAVER LAMP (CFLS) DISTRIBUTION

• POWER ALERT SYSTEM

• ENERGY AUDIT AND POWER FACTOR CORRECTION

• SOLAR POWER TECHNOLOGY

• TIME OF USE TARIFF (TOU)

• RIPPLE CONTROL OF ELECTRIC GEYSERS

• PREPAYMENT METERING

DEMAND SIDE MANAGEMENT (DSM)

• DSM IS A UTILITY PROGRAM AIMING TO FINE TUNE CONSUMERS ENERGY CONSUMPTION PATTERN ACCORDING TO UTILITIES ENERGY PRODUCTION AND DISTRIBUTION CAPACITY

• TO REDUCE LOAD-SHEDDING

• TO RELEASE SYSTEM CAPACITY

• MAKE AVAILABLE ADDITIONAL POWER FOR NEW CONNECTIONS

• REDUCED ENERGY BILLS FOR CUSTOMERS

• PROMOTE ENERGY EFFICIENCY AND SAVE THE ENVIRONMENT

CFL DISTRIBUTION

CFL DISTRIBUTION

AN 87MW NEW POWER PLANT WILL COST NOT LESS THAN US$300MILLION WHILE ZESCO SPENT U$4.0MILLION ON THE PROCUREMENT AND DISTRIBUTION OF THE CFLS

Consignment Distributed Savings (MW) Efficacy (CFL/kW)

IAES (1 million) 913,056 57 16

ZEM (1 million) 595,832 29.79 20

Cumulative 1,508,888 86.79 17

POWER ALERT SYSTEM

• THE POWER ALERT SYSTEM IS ESSENTIALLY A COMMUNICATION TOOL THAT UTILIZES THE TELEVISION AND RADIO MEDIA AS THE CHANNEL TO INFORM ELECTRICITY CONSUMERS ON THE ENERGY SITUATION IN THE POWER NETWORK THEREBY PROMPTING CUSTOMER RESPONSE.

• THE SYSTEM THEREFORE TRIGGERS VOLUNTARY PARTICIPATION OF CONSUMERS IN ELECTRICITY DEMAND REDUCTION BY SWITCHING OFF UNNECESSARY LOADS IN RESPONSE TO THE BROADCAST POWER ALERT MESSAGE.

POWER ALERT SYSTEM

62

SOLAR POWER

• 305 OUT OF 1,000 SOLAR GEYSERS INSTALLED MOSTLY IN GOVERNMENT INSTITUTIONS AND TRANSIT HOMES (WITH 566KW POWER SAVINGS).

• REMAINING SOLAR GEYSERS TO BE INSTALLED IN ZESCO INSTITUTIONAL HOUSES MOSTLY AT POWER STATIONS & SERVICE CAMPS

• ZESCO HQ OFFICE LIGHTING AND PARLIAMENT EMERGENCY SUPPLY ALREADY ON SOLAR POWER

• AT ZESCO HQ 1,850 LEDS RETROFITTED IN FLUORESCENT FITTINGS

RIPPLE CONTROL SYSTEM

• MEANS OF LOAD SHAVING (INSTEAD OF LOAD SHEDDING)

• MAINLY TARGETED AT ELECTRIC GEYSER LOADS

• INITIALLY TARGETED AT 100,000 RESIDENTIAL CUSTOMERS IN LUSAKA

• PROJECTED LOAD OF ABOUT 135MW TO BE SAVED

• CAN BE IMPLEMENTED EVEN UNDER SYSTEM EMERGENCIES

• TECHNICAL SPECIFICATIONS DRAWN. FINANCING

ARRANGEMENTS UNDERWAY

ZESCO PROJECTS

CONCLUSION

• ZESCO LIMITED HAS EMBARKED ON VARIOUS PROJECTS FROM THE PRODUCTION SIDE THROUGH TO DISTRIBUTION TO REDUCE AND ULTIMATELY STOP LOAD-SHEDDING.

• GOVERNMENT BEING THE MAJOR SHAREHOLDER HAS GIVEN SUPPORT THROUGH PROVISION OF EQUITY AND GUARANTEES FOR DEBTS BEING CONTRACTED TO FINANCE THE PROJECTS.

• LOAD-SHEDDING IN ZAMBIA, THE PLAN IS THEREFORE TO ENSURE COST REFLECTIVE TARIFFS IN ORDER TO ATTRACT INVEST IN THE GENERATION, TRANSMISSION AND DISTRIBUTION ELECTRICITY INFRASTRUCTURE.

THANK YOU!!