The Power Rush – Zambia positions for increased power exports


Lusaka –Zambia is positioning itself to increase power generation, as the Southern African Development Community grapples serious power shortages.

Power exports are expected to earn Zambia an extra US$2 million a month.

So serious is the power shortage within the region that Namibia is seeking assistance from its neighbour, Zambia, to enable it to meet increasing electricity demand, as energy deficit continues to haunt the Southern African state.

The drought that is gripping Namibia, which has resulted in a drop in water levels in the country’s river that drives the hydropower plant, Ruacana, has contributed to the country’s power deficit.

The fall in water levels has resulted in erratic power generation, transmission and distribution over the past few months.

Besides, Namibia’s major electricity supplier ‑ South Africa’s state-owned Eskom ‑ has cut off supplies to the country chiefly due to growing demand at home.

This has, therefore, prompted Namibia’s power utility, Nampower, to look to its neighbours in the region.

Incidentally, Namibia is part of a foursome comprising Zimbabwe, Zambia and Botswana (ZIZABONA) ‑ in which the four neighbouring countries have agreed to share power if one has a shortfall. According to this agreement, Namibia’s neighbours could bail the country out.

Nampower’s Chief Executive Officer, Paulimus Shilamba, last week revealed to the Zambian media Namibia’s plans to import additional power from Zambia and other neighbours to ‘energise’ the country’s power needs.

Namibia is seeking nearly 100 megawatts in additional power from Zambia, through Zambia Electricity Supply Corporation (ZESCO). Namibia presently receives 50 megawatts from Zambia daily, while also sourcing additional power from other neighbours.

 “We have requested for an additional 100 MW of electricity daily and with the recent expansion of power stations in Zambia, it could be possible for ZESCO to sell us more power,” said Shilamba.

The utility is also negotiating for a 100-megawatt power purchase agreement with Mozambique’s utility EMD, and 50 megawatts with Zimbabwe.

Namibia generates nearly 45 percent of its power demand locally, while 55 percent is made up of imports from Mozambique, South Africa, Zimbabwe and Zambia.

Shilamba said Nampower is assessing the potential to invest in two thermal power stations in Harare and Bulawayo in return for guaranteed supplies.

The deal to expand generation capacity at Harare and Bulawayo thermal power stations, if it is reached, will replace a 2007 deal in which Nampower advanced Zimbabwean utility, ZESA, US$40 million to refurbish four units at coal-fired Hwange Power Station in return for a guaranteed supply of 150MW for five years.

The Nampower-ZESA deal, which was supposed to end this year, was extended by another year to 2014, Shilamba said.

A net electricity importer, Nampower pins its hopes for electricity self-sufficiency on a US$1.3 billion Kudu gas-to-power plant, expected to be generate 800MW by 2018.

“The power supply deficit and associated challenges will continue to prevail until the commissioning of a new base-load power station in 2018,” Shilamba said.

“This will be particularly so as one of our suppliers, Eskom, will be experiencing serious challenges in managing the power supply situation in their own country. In the absence of a guaranteed import from Eskom until then it will indeed be challenging for Nampower to keep the lights on,” he added.

Nampower shut down coal-fired 120MW Van Eck power station for a R300-million equipment upgrade last year. Van Eck, situated on the outskirts of Windhoek, is expected to be on the grid by mid-next year, Shilamba said.

ZESCO exports electricity to some countries in the Southern Africa Power Pool (SAPP) during off-peak hours when most consumers require minimal usage of energy. Zambia’s electricity generation capacity lies between 1  730 MW and 1 820 MW during peak periods, with mining firms chewing 50 percent of that daily.

Recently, Zambia said it wants to upgrade its energy infrastructure to ensure it meets increasing demand for electricity, chiefly by mines through a more than US$5 billion project line in which the government is understood to be courting investors to come in under public-private partnerships.

The state is targeting economic growth of eight percent per annum and realises this will not be achieved with the current power supply situation.

Against this backdrop, President Michael Sata’s government has directed ZESCO to increase capacity at Kariba North Bank, near the border with Zimbabwe, and other hydro plants to meet the increasing consumption at home and for exports.

In Namibia, the crisis in energy has been amplified by the severe drought gripping the country, generation capacity at key hydro power station, Ruacana, has fallen to around 90 megawatts from design capacity of 332 megawatts due to low water levels in Kunene River.

According to a report carried in The Southern Times earlier, the water flow at Ruacana is currently in the region of 60 cubic metres per second, compared to the 70 cubic metres per second required to operate one machine and 280 cubic metres per second that will be required to operate the whole power station at full load, Shilamba said.

The utility will over the next five years embark on a R13-billion investment in generation capacity and transmission expansion programme. Nampower will finance R8b of the investment requirements from own cash reserves and raise the balance of R5b through bonds and debt, Shilamba said.

Nampower also plans to approach its traditional financiers, European Investment Bank (EIB), Germany Development Bank (KfW) and French Development Bank (AFD) for loans. The Namibian utility company has previously secured financing from KfW and AFD.

“We are yet to work out how much do we borrow and raise on the market. We have our traditional financiers (EIB, KfW and AFD), we are going to approach them for loan financing,” Shilamba adds.

The utility will spend R7b on an extensive transmission expansion plan for the entire country over the next five years, Shilamba said.

Meanwhile, work on a US$250m electricity transmission interconnector linking power networks of Botswana, Namibia, Zambia and Zimbabwe will start in 2014.

Namibia will host ZIZABONA, aimed at providing an alternative Western transmission corridor to de-congest Southern Africa’s only existing central transmission corridor from Zambia, through Zimbabwe, Botswana and into South Africa, Shilamba told journalists in Namibia earlier.

The ZIZABONA project will be owned 20 percent equally by the four-shareholding utilities and the balance of the equity will be split between South Africa’s Eskom and Zambia’s Copperbelt Energy Corp.

December 2013
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