Does it make economic sense to continue power exports to Namibia?
Official Namibia government and their Ministry of Industrialization and Trade data reveals that Namibia has annual electricity demand of 600MW, has generation capacity of 400MW with annual power deficit of 200MW.
Following Zambia’s Energy minister Chibwe Kapala’s confirmation in the National Assembly, that Zesco has continued to export about 100MW to Namibia, more questions than answers are being raised.
Despite a home deficit now growing to a reported staggering 750MW and some areas, businesses and households in Zambia being subjected to now over 12hours of load shedding a day, crippling business and economic operations, more and more people are getting economically hurt.
Another feature is that the Zambian government has sighted drought as the main cause of reduced power generation, a variable that immediately triggers a force majuer clause in supply contracts. But then, how do you explain the continued exports of a sizeable 200MW?
Power utility ZESCO is a State Owned Enterprise, ideally expected to prioritize national needs. But the utility has issued force majeure notices to its local clients but continues to hold on to its exports. This not only means low productivity for the local economy, but household inconvenience is also adding another dampening dimension.
Some economic questions ring when one independently and critically looks at this scenario we’re local supply and economic wellbeing is sacrificed at the expense of exports. Below are some of the key questions:
- Do these so sacrosanct export power supply aggreements have force majeure clauses? If not why not draw on international law precedence set even within the region? Have officers or the company secretary who missed out inserting the force majeure clause been held accountable?
- At the rate at which load shedding hours are increasing, how many local businesses will collapse and die? Is the damage to local businesses less harmful as perceived by the government than ending the exports to Namibia?
- Can Zesco or the Ministry of Energy release and make public their cost benefit analysis that has informed their economic decision to opt to continue with export at the expanse of local supply? Decimating local SME sector and capital risks setting local businesses backwards which may take another generation to recover
- There are some arguments that these power exports supply agreements have clauses that can not be breached, since ZESCO is a public company, why cant they make these agreements public, is there something to hide in these agreements?
- Last but not the least, has there been any attempts to engage in negotiations with Namibia to halt exports due to the great need at home, why are we under estimating the long term damage to the local economy if there is no cost benefit analysis shared??
Dear ZBT reader, Zambia has about 1.3 million SMEs or local businesses which rely on stable energy supply, which means that for an average family of 5, SMEs are caterinf to a population of over 6.5 million. what other questions do you have on this matter?
-Zambian Business Times
Our politicians can’t fathom the gravity of the current situation
They think it’s pf cadres who are complaining.
The Power deficit situation in Zambia is not necessarily the effects of drought. This government started exporting power in 2022, when Hakainde said he has ended Load shedding..just after 6 months in power. Well the country was exposed to 16 hours load shedding..and Hakainde started importing what he was exporting at a higher cost.
Hakainde, despite what happened in 2022, still continued exporting power to neighboring countries..just like he was exporting Maize.
Here we are now, 12-14 hours load shedding, and the man is still exporting power!
And what we are seeing are Chipante pante solutions… Detaching the Transmission and Distribution infrastructure from Zesco and creating an Independent System Operator so that there is open access to the National Grid ( In essence selling the National Grid to an Independent System Operator) .
Entering into Power purchase agreements with mostly Brief Case Companies who have no history in Power Generation.
And the latest ….we will build a Tanzania -Zambia – Kenya interconnector so that we start importing power from Tanzania after 9 months…
Zambia will be in total darkness soon if these incompetents continue playing around.
When Edgar Lungu says he handled the power situation and food security situation very well during his reign, I definitely agree with him… Hakainde is no match.He is an incompetent Manager. A total failure.
His level is as a councillor handling CDF!
Please! It is very good to explain issues from the point where everyone one or people will or can understand and move together with the government than to pretend just for the purpose of alarmingly the nation or creating unnecessarily debates where it is not even supposed to be or necessary.
Now, the point here is when the government or rather ZESCO started exporting power to NAMIBIA, it was not just based on verbal agreement but on written legal agreements where even their legal teams from both entities and Countries advised and signed their signatures base on conditions and obligations which each part of the contract was to honour, then, that in itself becomes binding and whoever goes against the agreement is penalized. That is the truth of the matter. But more importantly also here is that the buying country will also plan their programs based on what is already agreed and sealed hence once you disturb it, you will then disturb the whole process, including their planning hence the issue of ( penalties) payments for obligating the contract or agreement comes in. The only option in this case is for government to also start importing from other countries which have excess power in order to caution on the deficit. This is how it works. And I am sure government is looking into all those avenues and options already I have seen something in waiting – the importation of power from Tanzania in addition to some solar power plants that is being done in some places in the Country; so it’s not in the best interest of our being, as a Country to just terminate the contract there and then to attend to our challenges. No baba. Aaanhh.
Please try to explain to our people properly.
It is a problem of having business men and women in power. To them, making profit from exporting power makes more economic sense than providing it to Zambians at reduced profit. It was the same logic at play in the export and depletion of our maize reserves.
Reading through the comments one would wonder if the folks commenting appreciate the remification of their suggestion.
Sometime I honestly wonder if we are dealing such immature minds that think grave decision and the cost implication are taken into account. Sure thinking like a toddler who cries cause of his temper tantrums and thinks appeasing them is the solution.
Again I reiterate. We consume power at less that the cost of production. So Zesco supplies to us at a loss. We have obtained loans to maintain/rehabilitate and expand the power grid and power stations. Those loans were sometimes misapplied to other issues than the intended purpose. So to complete the project and enjoy its benefit(more power) funds needed to be sourced from somewhere.
Aka selling power to those countries that will pay the ecomomical value of the cost of generation and then some.
So when you stop supply to Namibia, there will be a breach in the contract. Then how do you meet you other loan obligations? You supply to your local consumers at a loss?
Bite the bullet. All this shall come to pass. Lets be objective and think through the options that government faces.