MINISTERIAL STATEMENT: Power Supply Deficit in the Country – Update on electricity load management and the upward adjustment of electricity tariffs
JUNE, 2024
Madam Speaker,
I wish to thank you for granting me this opportunity to deliver a Ministerial Statement on power supply deficit in the Country with regards to electricity load management programme being implemented through our national utility company ZESCO and upward adjustment of electricity tariffs.
Madam Speaker,
This Ministerial Statement follows an Urgent Matter without notice raised by Mr Joel Chibuye Member of Parliament for Roan with regards to direction being taken by the Ministry of Energy to ensure colleges have electricity.
In her response, Madam Speaker directed the Minister of Energy to render a Ministerial Statement on the broader power supply deficit in the Country.
Madam Speaker,
Allow me to remind ourselves and the nation, that the Country’s installed electricity generation capacity stands at 3,777 Mega Watts (MW) with hydropower accounting for 3,154 MW representing 85 percent (%) of total generation capacity with a current estimated peak demand of 2,600 MW.
Madam Speaker,
Despite the installed electricity generation capacity, an estimated 900 MW is being generated from our major reservoir dams with a deficit of approximately 750 MW.
The El Nino-induced drought phenomenon has caused a significant impact on the region’s rainfall pattern. Zambia in particular, experienced a severe decline in rainfall, with the Zambezi and Kafue River basins, being significantly affected.
Madam Speaker,
Emanating from the low water levels, a planned load shedding and load management was necessitated in March 2024 to avoid a
complete shutdown of the power stations. Initially an Eight (8) hours load shedding was effected on 11th March 2024. After a critical review of the ongoing load management measures and low water levels in our major reservoirs, a decision was made to extend the daily hours of load shedding from Eight (8) hours to Twelve (12) hours, staggered in intervals of Six (6) hours 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. The extension of the 12 hours load shedding took effect on Monday, 20th May 2024. However, abruption in the schedules coupled with longer hours of load shedding maybe experienced due to unforeseen technical faults or thefts of installations. Going forward we shall ensure that timely communication is done to inform the public accordingly.
Madam Speaker,
In implementing the load shedding programme, ZESCO considered the vital role played by strategic institutions such as health facilities, water utilities, industry and mining firms as well as security wings. Therefore, these critical institutions and establishments have been exempted from load management. Should these experience power outages, it would be due to technical Faults or theft of installations as alluded to earlier.
Madam Speaker,
The Government has noted the need for a lasting solution that fosters the provision of affordable and sustainable energy services. In this regard, the following measures have been put in place:
- Short term measures
a) Power imports (firm and non-firm power): Currently, power import stands at 188MW. In addition, ZESCO Limited has also clawed back 160MW of power from export contracts.
b) Restarting of the 105 MW Ndola Energy Power Plant: Currently, the Ministry of Energy, ZESCO and Ndola Energy
Company Limited (NECL) are undertaking negotiations with a view to restarting the power plant by July 2024.
c) Development of a 100MW Solar PV power plant in Chisamba: The Government, through ZESCO is developing the project which is scheduled to be completed in December 2024.
d) Installation of 120 MW of Diesel Generators in Ndola and Mpika
e) Government through the Energy Regulation Board has streamlined the licensing processes in order to apply light handed regulations on entities that would want to set up generation plants.
f) Cabinet this week approved the Open Access and Net Metering Regulations. These regulations will enable industry and households to supply electricity to the national grid and earn an income by selling the power. Madam Speaker, Open Access does not mean unbundling of ZESCO but is meant to allow power producers to use the transmission network to wheel power to the intended offtakers without discrimination at a fee.
g) Tariffs and Power Purchase Agreements. ZESCO has been directed to speed up and on-board all Independent Power Producers with a lucrative tariff during this crisis.
- Medium – Long term projects
(a) Renewable Energy Expansion:
- 120 MW Solar PV Portfolio: Implementation of a 120 Mega Watt portfolio of solar PV power projects under the Global Energy Transfer Feed-in Tariff (GET-FiT) program.
- Maamba Collieries Phase II:
Plans are underway to develop the 300 MW Maamba Coal Power Plant. We anticipate that financial closure will be reached by 30th June 2024 and construction expected to commence immediately. - Luapula site CX Hydropower Project: Plans are already underway to expedite progresss on the development of the 271MW Luapula hydropower project on the Luapula River.
- Strategic programmes and long-term projects:
The Government completed the development of the first Integrated Resource Plan (IRP) in 2023 which is aimed at providing sustainable solutions to Zambia’s challenges in the electricity sub-sector.
The IRP outlines a strategy for addressing these challenges through the implementation of sustainable solutions. The programme projects a need for additional generation capacity of 6,505 megawatts (MW) by 2026, requiring an estimated investment of USD 5 billion. To meet long-term demand, the IRP forecasts a total of 23,000 MW by 2050 with a corresponding investment requirement of nearly USD 31 billion.
Madam Speaker
At this juncture, allow me to update this August House on the upward adjustment of electricity tariffs through the Energy Regulation Board (ERB).
Madam Speaker,
The recently approved upward adjustment of electricity tariff was in line with the Cost of Service Study findings which recommended for cost reflective tariffs. The adjustment was also granted in accordance with the Energy Regulation Act No. 12 of 2019 which
allows for multi-year tariff adjustment upon an application by a utility company.
Madam Speaker,
The House may wish to note that ZESCO limited applied for an upward adjustment of electricity tariffs through the Energy Regulation Board (ERB) in December 2022. The application was approved effective 1st May 2023. This was a multi-year tariff application for the period 2023- 2027 in line with the Electricity Act No. 11 of 2019 provisions. The approved adjustments were as follows;
i.) Adjustment of ZESCO tariff structure by increasing the number of bands for customers in the Residential, Commercial and Social Categories;
ii.) Introduction of a new category for Water Pumping Stations owned by water utility companies; and
iii.) Abolishment of Maximum Demand (MD) Category number 4 (MD4) and the migration of the said band to Power Supply Agreements (PSA). MD4 customer category include all those whose consumption is greater than 5000kVA.
Madam Speaker,
According to the 2023 – 2025 Multiyear tariffs adjustments have been proposed at 37% in 2023, 9% in 2024, 15% in 2025, 10% in
2026 and 14% in 2027.
Madam Speaker,
It is important to state that the Board of the ERB allowed ZESCO to migrate to the 2024 pre-approved multi-year tariffs for retail (domestic) consumers while the 2025 to 2027 tariffs remain conditionally approved subject to ERBs annual review of the Regulatory Clearing Account (RCA).
MADAM SPEAKER.
The Expected outcomes of the multi-year tarrifs are as follows:
Improved service delivery through provision of electricity services.
Improved security of supply through investment in alternative Renewable Energy sources.
Improved financial position of the utility.
Increased number of private sector participation in the Electricity supply industry to bring about competition.
Effective maintenance of the ZESCO infrastructure.
Madam Speaker,
In conclusion, I wish to submit that the current situation has negatively impacted households and businesses. Government recognizes the challenges that the load shedding hours and electricity tariff adjustment present. However, these measures are meant to sustain ZESCO’s operations and attract investments both for our utility company and in the broader electricity sub-sector.
Therefore, Government through the Ministry of Energy remains committed to seeking sustainable solutions to resolve the electricity crisis while enabling sustainable operations for our national utility.
Madam Speaker, I thank you.
Zambia will never change, despite all these initiatives and promises loadshedding will be a permanent occurrence from time to time going forward. We have heard so many stories about loadshedding coming to an end but these are just fairytales. We’re a cursed continent.
The first line of the statement should have read ” madam speaker, I apologize to the people of zambia for making a false statement in February this year that there shall be no loadshedding in the country come what may!”