By Kennedy Mupeseni –
THE Government plans to scale up copper production to an all-time high of three million tonnes in the next decade, a robust energy sector will be key to driving this growth.
Experts in the energy sector estimate that over 50 per cent of electricity generated in the country is consumed by the mining sector.
In order to satisfy the mining sector’s demand, the country needs to more than triple its current power production of over 3,000 megawatts in the next 10 years.
According to the 2022 National Budget summary by Grant Thornton, the focus by Government will be on development and management of energy sources in a sustainable way.
This entails having cost reflective tariffs, as well as accelerating the integration of electricity infrastructure projects to improve access to regional power markets.
Similarly, petroleum procurement processes will have to be restructured and made efficient, while looking at implementing robust renewable energy investment plans to improve the energy mix.
Finance and National Planning Minister Situmbeko Musokotwane committed to reviewing Zesco Limited’s corporate structure for it to run efficiently.
In addition, Dr Musokotwane promises that power purchases agreements will be renegotiated as the Government looks at scaling up the Rural Electrification Programme through grid network extension and deployment of off grid electrification solutions.
And the seemingly rekindled relation between ZESCO Limited and Copperbelt Energy Corporation Plc (CEC) is good for the energy sector.
On January 19, this year, the two companies announced the commencement of negotiations to agree on new arrangements for power supply and provision of transmission services between them.
The negotiations, which commenced on January 17, are expected to culminate into a new agreement to replace the bulk supply agreement which expired on March 31, 2020.
This is according to a joint statement by CEC senior manager corporate communication Chama Nsabika and ZESCO senior manager corporate affairs John Kunda.
Managing directors of the two utilities Victor Mapani and Owen Silavwe indicate that the two entities need a new agreement that can carry business forward.
“ZESCO and CEC have for many years enjoyed a symbiotic and synergistic relationship that came to an end in March 2020 and the time has come for the two companies to work together constructively to put in place a new agreement that should carry the business relationship between the two companies forward,” they indicate.
Mr Mapani and Mr Silavwe say ZESCO and CEC are committed to working together to find a win-win solution that is mutually acceptable and beneficial not only to the two companies but to the entire power sector and the country at large.
The two companies are confident that the strong interconnection that exists between their power networks will be the cornerstone of their efforts to foster a cordial, transparent and commercially sound business relationship.
Meanwhile, Energy Minister Kapala Chibwe has revoked the Statutory Instrument (SI) No. 24 of 2021 Electricity (Common Carrier) (Declaration) Regulations, which declared CEC’s transmission and distribution lines as Common Carrier.
SI No. 24 of 2021 effectively re-declared CEC’s lines as Common Carrier following the quashing of SI No. 57 of 2020 by the High Court, after the successful Judicial Review application by CEC.
The revocation is contained in the new SI No. 94 of 2021 signed around December last year. Commenting on the development, CEC states that the revocation of SI No. 24 of 2021 which declared CEC power infrastructure as a common carrier is good for business.
Company Secretary Julia Chaila states in a market update statement that CEC is pleased with the development.
“CEC is pleased with this development which reinstates and protects the Company’s property and commercial rights to manage its assets and business, to negotiate the terms and conditions for the use of its infrastructure and to safeguard its contractual rights,” Ms Chaila says.
The company has reiterated its commitment to working closely with all stakeholders in furtherance of the best interest of the electricity sector and the Zambian economy.
And stakeholders want the Government to handle the restructuring and the unbundling of ZESCO Limited assets cautiously.
Carol and Claude Consultancy principal consultant Berry Mwango says ZESCO management should have waited for the study on ZESCO restructuring and unbundling to conclude before abolishing certain directorates.
In the 2022 budget speech, Dr Musokotwane pledges to review ZESCO Limited’s corporate structure for it to run efficiently which has seen certain corporate structures abolished.
But Mr Mwango says issues of energy need general consensus before effecting any changes to energy assets.
“Everyone knows ZESCO is top heavy, but management should have waited for a study being commissioned by the Industrial Development Corporation (IDC) on ZESCO restructuring to be completed before doing away with certain directorates,” he says.
While unbundling and restructuring of ZESCO is inevitable, there is need to build consensus for policy change credit to rein.
Mr Mwango wants the existing political heavy handedness in the running of the power utility company removed for the utility to run efficiently.
He is taken aback by the way the new managing director was appointed and the subsequent removal of a managing director barely 48 hours after the board was appointed.
“It is unfortunate that issues of corporate governance are still questionable even after the change of Government, a board is appointed, barely 48 hours a managing director is fired and the new one is ushered in, seriously?
“When did the board sit? How long was the vetting processing and building a case for the incumbent for possible firing? These are the things we need to look at,” he adds
Issues of good corporate governance are critical in ensuring that ZESCO is run as a commercial entity.
Mr Mwango however, says a well managed unbundling and restructure process will result in restoring efficiency in the running of the utility.
He proposes that generation can be handled by the private sector and the Government run entity handle distribution which is more costly to run than generation.
It is time the country explores the Luapula River power potential among other areas in the Northern Circuit and let power produced in the Southern part of the country be exported to the Southern Africa Power Pool (SAPP) market.
Going forward a ‘full-bodied’ energy sector will be key in unlocking the country’s economic potential looking at the critical nature of the energy sector.
As observed above, the ambitious target by the Government to reach three million tonnes of copper per year in the next 10 years needs more investments in the power industry to power production.
