DOCSLIB.ORG

The Cost of Power Outages to Zambia's Manufacturing Firms

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The Cost of Power Outages to Zambia's Manufacturing Firms Final report The cost of power outages to Zambia’s manufacturing firms Imaduddin Ahmed Michelle Baddeley D’Maris Coffman Jim Meikle Graham Sianjase June 2019 When citing this paper, please use the title and the following reference number: F-41408-ZMB-1 Contents Summary .................................................................................................................................................................................... 3 Acknowledgements ................................................................................................................................................................... 4 1. Background ...................................................................................................................................................................... 5 2. Impact of power outages in the literature ....................................................................................................................... 8 2.1 More recent literature on Zambia’s recent outages ..................................................................................................... 13 3. Objectives / hypotheses ................................................................................................................................................. 17 4. Methodology for assessing the impact of power outages on Zambia’s manufacturing firms ....................................... 18 4.1 Theoretical approaches ................................................................................................................................................. 18 4.2 Research design ............................................................................................................................................................ 18 4.2.1 Sampling frame ..................................................................................................................................................... 19 4.2.2 Sampling achieved................................................................................................................................................. 19 5. Results of our surveys and interpretations .................................................................................................................... 21 5.1 General characteristics of our sample........................................................................................................................... 21 5.2 Periods of worst outages .............................................................................................................................................. 22 5.2.1 Years of worst production outages and extent of production losses .................................................................... 22 5.2.2 When firms purchased their oldest generator still in use ..................................................................................... 23 5.2.3 Months of worst electricity reliability in general .................................................................................................. 23 5.3 Damages incurred from Zesco’s outages ...................................................................................................................... 23 5.4 Damage mitigation strategies ....................................................................................................................................... 23 5.5 Marginal cost of outages ............................................................................................................................................... 24 5.5.1 Marginal cost of outages inferred from willingness to pay for more reliable energy ........................................... 24 5.5.2 Marginal cost of outages inferred from firms’ use of self-generation .................................................................. 27 5.6 Production delays prevented by self-generation .......................................................................................................... 29 5.7 Predictors of a firm’s likelihood to invest in and intensity use of self-generation ........................................................ 30 5.7.1 Predictors of a firm’s scale of investment in self-generation ................................................................................ 32 5.7.2 Predictors of a firm’s likelihood to use self-generation ........................................................................................ 33 5.8 Special energy provision for important clients ............................................................................................................. 35 5.9 Willingness to sell energy back to the grid .................................................................................................................... 35 5.10 Pattern of Zesco energy consumption ........................................................................................................................ 36 6. Discussion....................................................................................................................................................................... 37 6.1 Periods of worst outages ...................................................................................................................................... 37 6.1.1 Years of worst production outages and extent of production losses .................................................................... 37 6.1.2 Months of worst electricity reliability in general .................................................................................................. 37 6.2 Damages incurred from Zesco’s outages ...................................................................................................................... 38 6.3 Mitigation strategies and their efficacy ........................................................................................................................ 38 6.4 Marginal cost of outages ............................................................................................................................................... 39 6.4.1 Self-generation patterns ....................................................................................................................................... 40 6.4.2 Predictors of a firm’s likelihood to invest in and intensity use of self-generation ................................................ 40 6.5 Pattern of Zesco energy consumption .......................................................................................................................... 44 7. Conclusions and policy recommendations........................................................................................................................... 44 References ............................................................................................................................................................................... 47 Annex 1– Last iteration of questionnaire used, July 2018 ....................................................................................................... 50 1 Annex 2– Research implementation, challenges, sources of data and key informants ........................................................... 55 Annex 2.1 Building and incentivising a field team .......................................................................................................... 55 Annex 2.2 Iterations of questions we asked, and the learning process of asking the right questions ........................... 55 Annex 2.3 Weaknesses of the survey ............................................................................................................................. 55 Annex 2.4 Challenges faced in interviewing firms .......................................................................................................... 55 Annex 2.5 Challenges exogenous to the questionnaire itself ........................................................................................ 56 Annex 2.6 Triangulation and contextualisation: conversations with key informants .................................................... 56 Table 1: Manufacturing’s share of electricity consumption dropped from 2015 to 2017 in Zambia. Excerpted from Energy Regulation Board of Zambia, 2016, p. 9, 2017b, p. 9, 2018, p. 36 ............................................................................................. 5 Table 2 Annual reports of listed Zambian manufacturers mentioning the power outages ....................................................... 5 Table 3 Chen and Vella’s table (1994) of Taiwanese industries’ multiplier effects on the rest of the economy using in-put- output analysis (top 10 industries most relevant to Zambia) .................................................................................................. 12 Table 4 Zesco revised its tariffs twice upwards in 2017. Source: Zesco.co.zm (Zesco Ltd, 2017a) accessed as of 29 October, 2018. It appears that 'current' was the tariff prior to 15 May, 2017 ....................................................................................... 16 Table 5 Years of manufacturing experience in our sample of manufacturing firms ................................................................ 21 Table 6 2016 saw even worse production losses than 2015, with surviving firms reporting losses on the higher spectrum of 16-30%. Even in 2018, firms were on average reporting production losses of 1-15% ............................................................
Load more

Recommended publications
  • Water Security on the Kafue Flats of Zambia Water Research Node
    Water Security on the Kafue Flats of Zambia Water Research Node Monash South Africa Private Bag X60 Roodepoort, 1725 South Africa 144 Peter Road, Ruimsig. www.msa.ac.za/research/ www.watersecuritynetwork.org/ IWSN SOUTH AFRICA Report No. TP/MC/7/16 This document should be cited as: Chomba, M.J. and Nkhata B.A. (2016) Water Security on the Kafue Flats of Zambia. Technical Report of the International Water Security Network, Water Research Node, Monash South Africa, Johannesburg. Acknowledgements We wish to acknowledge the funding contribution of the International Water Security Network which is funded by Lloyd’s Register Foundation, a charitable foundation helping to protect life and property by supporting engineering-related education, public engagement and the application of research. We further wish to acknowledge the leadership and intellectual contribution of Chad Staddon who supported us throughout the preparation of this technical report. Charles Breen is also thanked for his profound insights during the drafting of the report. Front cover photos supplied by Linda Downsborough 2016 i Executive Summary This technical report highlights key water security issues in Zambia with special reference to the Kafue Flats. It draws particular attention to issues of water availability and demand, competing water users, and institutional arrangements for securing water and associated resources. The report comes at a time when several countries in southern Africa including Zambia are negotiating trade-offs associated with developing water resources whilst trying to ensure ecosystem integrity. Such trade-offs are occurring amidst several other pressures including population growth, urbanisation, climate variability, and changing patterns of economic production and consumption.
    [Show full text]
  • Mapping the Kafue Flats of Zambia a Case of the Mwanachingwala Conservation Area
    MAPPING THE KAFUE FLATS OF ZAMBIA A CASE OF THE MWANACHINGWALA CONSERVATION AREA Alick. R. MWANZA, Zambia Key words: Wetlands, photo control, environment, sustainability, digital mapping. ABSTRACT The Kafue Flats of Zambia are an open savannah wetland covering about 6,500 square kilometres along the lower reaches of the Kafue River. They are rich in a variety of wildlife, some of it unique to it. It also has various huge industries along it, which have disturbed the ecosystem of the wetlands with their chemical effluent and use of its waters. A project called WWF – Partners for Wetlands was thus initiated to try to mitigate this disturbance of the Kafue flats ecosystem. But for this project to successfully take off it required production of an up-to-date base map for planning and implementation of the entire project. The Department of Surveying in the School of Engineering of the University of Zambia was therefore contracted to produce the desired bas map for the conservation area and its environs, a total area of some 1,500 square kilometres in the Mazabuka district of Southern Province of Zambia. This paper therefore outlines how this mapping project was carried out as a contribution to sustainable use, management and environmental conservation of the Kafue Flats of Zambia. 1. INTRODUCTION The Kafue Flats of Zambia are an open savannah wetland covering about 6,500 square kilometres along the lower reaches of the Kafue River. They are rich in the best-known Kafue lechwe that is found nowhere else in the world and also support a unique and diverse bird life that includes the largest population of the endangered Wattled crane [WWF2, 2000].
    [Show full text]
  • Does the Current Sugar Market Structure Benefit Consumers and Sugarcane Growers?
    Does the Current Sugar Market Structure Benefit Consumers and Sugarcane Growers? by Brian Chisanga, Ferdinand H. Meyer, Alex Winter-Nelson, and Nicholas J. Sitko Working Paper 89 October 2014 Does the Current Sugar Market Structure Benefit Consumers and Sugarcane Growers? by Brian Chisanga, Ferdinand H. Meyer, Alex Winter-Nelson, and Nicholas J. Sitko Working Paper No. 89 October 2014 Indaba Agricultural Policy Research Institute (IAPRI) Chisanga is research associate at the Indaba Agricultural Policy Research Institute; Meyer is director of the Bureau for Food and Agricultural Policy (BFAP) and lecturer in the Department of Agricultural Economics, Extension and Rural Development, University of Pretoria; Winter-Nelson is professor at the Department of Agricultural and Consumer Economics, University of Illinois, Urbana-Champaign; Sitko is assistant professor, International Development, Department of Agricultural, Food, and Resource Economics, Michigan State University (MSU), and USAID chief of party under the Food Security Research Project FSRP. ii ACKNOWLEDGMENTS The Indaba Agricultural Policy Research Institute is a non-profit company limited by guarantee and collaboratively works with public and private stakeholders. IAPRI exists to carry out agricultural policy research and outreach, serving the agricultural sector in Zambia so as to contribute to sustainable pro-poor agricultural development. We wish to acknowledge the financial and substantive support of the Swedish International Development Agency (SIDA) and the United States Agency for International Development (USAID) in Lusaka. We further would like to acknowledge the technical and capacity building support from Michigan State University and its researchers, and thank Patricia Johannes for her assistance in editing and formatting this paper. Any views expressed or remaining errors are solely the responsibility of the authors.
    [Show full text]
  • Kafue Flats, Zambia: Importance to Business to Importance Flats, Zambia: Kafue Wwf
    BRIEF ZM KAFUE FLATS, ZAMBIA: 2016 IMPORTANCE TO BUSINESS The Kafue River is the largest tributary to the Zambezi IMPORTANCE OF THE River (Figure 1 )1, contributing 9 per cent of the flow2,3. The abundance of water in the Kafue has allowed significant development of different sectors of the KAFUE RIVER TO ZAMBIA economy. Due to the increasing growth of different sectors, competition for water resources will expand. The Kafue is the economic hub of Zambia. The Upper Kafue Sub-Basin is home to the Copperbelt mining region. The Lower Kafue Sub-Basin is the source of 50 per cent of all hydropower produced in the country, home to 7 per cent of the national fisheries, 20 per cent of the national cattle herd, and supplies 44 per cent of Lusaka’s water. It is also an important tourism region, a Ramsar wetland of international importance and home to significant wildlife diversity. Figure 1. The Kafue and Zambezi river basins 1 http://www.grida.no/publications/zambezi/ebook.aspx 2 Figure source: http://webworld.unesco.org/water/wwap/wwdr/wwdr3/case_studies/pdf/ Zambia_National_Water_Resources_Report.pdf 3 http://siteresources.worldbank.org/INTAFRICA/Resources/Zambezi_MSIOA_-_Vol_3_-_ State_of_the_Basin.pdf WWF Brief 2016 page 1 As a business in Zambia, you are directly or THE PRIVATE SECTOR & indirectly dependent on the Lower Kafue. Whether using electricity generated at the Kafue Gorge Dam or water in Lusaka sourced from the Kafue River, WATER IN THE ECONOMY your operations or supply chain rely on adequate water quality and quantity. Therefore, sustainable management of water resources in the Kafue basin is your business.
    [Show full text]
  • Institute of I9Q Hydrology
    Institute of I9Q Hydrology Natural Environment Research Council • a • • • • •• • • •• • Natural Environment Research • Council • • • • • • • HYDROLOGICAL REVIEW OF THE KAFUE RIVER, ZAMBIA An investigation of the potential for the Zambian Sugar Industry to abstract more water for irrigation • • • This report is an official document prepared under contract between Booker Tate Ltd. and the Natural EnvironmentResearchCouncil.It shouldnotbe copied withoutthepermissionof boththe InstituteofHydrology • and ZambiaSugar Company. • • • Institute of Hydrology Crowmarsh Gifford Wallingford Oxfordshire OXIO 8BB UK Tel: 01491 838800 Fax: 01491 832256 Telex: 849365 Hydrol G November 1994 • ••••••••••••••••••••••• Executive summary • This report is presented to the Zambia Sugar Company via Booker Tate Ltd. The work carried out was a hydrological investigation of the Kafue River Basin, downstream of the Itezhi-tezhi reservoir. The primary objective of the study was to ascertain if there is sufficient water in the Kafue River to service the future requirement of the Zambian Sugar Industry to irrigate 17,400 ha of cane. The impact of the proposed future abstraction on energy production at the Kafue Gorge hydroelectricity plant was determined usingboth existing and possible future operating rules. This report summarises the various data collected and describes their subsequent validation and processing. Details of water rights for abstraction from the Kafue River were obtained. The water rights presently granted to the Sugar Industry allow abstraction of 925,000 ed''. 411 However, only during periods of peak irrigation requirement, in the dry season, does the water taken approach this value. For most of the year significantly less water is taken. If based on monthly crop water requirements, the annual requirement for irrigation of 17,400 ha is 22 % less than the total the sugar industry is presently allowed to abstract, although peak demand in September and October would exceed 1,000,000 ned4.
    [Show full text]
  • Zambia Sugar Profile
    2015 Annual Report Zambia Sugar Profile A SUSTAINABLE BUSINESS STARTS WITH A SMART LOCATION ambia Sugar is located at the Nakambala Sugar Estates in the ZMazabuka District of Southern Province. Zambia Sugar is a rural development partner, operating Africa’s second largest sugar mill in the rural town of Mazabuka. The Company grows sugarcane at its Estate, situated about 125km south of Lusaka on 17,000 hectares of land. The company supports an outgrower scheme of about 160 small-scale farmers which grows sugar cane on another 12 000 hectares, contributing 40% of the three million tons of sugar cane milled at Nakambala. Favourable climatic conditions and quality cane husbandry continue to give good cane yields across the cane growing areas. ZAMBIA SUGAR’S HISTORY: A his first transaction was modest, STORY OF SUSTAINABILITY Dahl’s vision was not. Despite being AND ASSURANCE offered GBP 3 (equivalent to ZMW In 1954, Tony Dahl, the owner of 6 at that time) per ton over a long “Better ‘Ole” Farm, planted a few haul, he reasoned that he was well pieces of cane on the contour ridge placed to become a sugar producer of his maize field to protect it from in Northern Rhodesia, the forerunner heavy rains, cane that a friend had of Zambia. The next stage required brought back from Natal, South a mill and some machinery which Africa. The result was impressive, had to be imported from the United and he planted the first cane field in Kingdom Standard Bank Limited 1955. For the next four years his dairy provided the necessary financing cattle were well served by the silage and all was set to build the factory.
    [Show full text]
  • Big Sugar in Southern Africa : Rural Development and the Perverted Potential of Sugar/Ethanol Exports
    Original citation: Richardson, Ben, 1982-. (2010) Big sugar in southern Africa : rural development and the perverted potential of sugar/ethanol exports. Journal of Peasant Studies, Vol.37 (No.4). pp. 917-938 Permanent WRAP url: http://wrap.warwick.ac.uk/3487 Copyright and reuse: The Warwick Research Archive Portal (WRAP) makes the work of researchers of the University of Warwick available open access under the following conditions. Copyright © and all moral rights to the version of the paper presented here belong to the individual author(s) and/or other copyright owners. To the extent reasonable and practicable the material made available in WRAP has been checked for eligibility before being made available. Copies of full items can be used for personal research or study, educational, or not-for- profit purposes without prior permission or charge. Provided that the authors, title and full bibliographic details are credited, a hyperlink and/or URL is given for the original metadata page and the content is not changed in any way. Publisher’s statement: This is an Author's Accepted Manuscript of an article published in Journal of Peasant Studies 37(4), 2010 [copyright Taylor & Francis], available online at: http://www.tandfonline.com/10.1080/03066150.2010.512464 A note on versions: The version presented here may differ from the published version or, version of record, if you wish to cite this item you are advised to consult the publisher’s version. Please see the ‘permanent WRAP url’ above for details on accessing the published version and note that access may require a subscription.
    [Show full text]
  • Illovo in Zambia
    Illovo Sugar Zambia Sugar Plc Socio-Economic Impact Assessment Internal Management Report October 2017 ILLOVO SUGAR AFRICA – ZAMBIA SOCIO-ECONOMIC IMPACT ASSESSMENT Contents Executive Summary ............................................................................... 1 Introduction............................................................................................. 3 Section 1: Generating economic value............................................ 7 Section 2: Creating employment opportunities ............................ 13 Section 3: Supporting farmer livelihoods ......................................... 18 Section 4: Investing in communities ................................................. 23 Section 5: Promoting environmental sustainability ........................ 26 Section 6: Sugar in the marketplace ............................................... 30 Recommendations and challenges ................................................ 31 © Corporate Citizenship Sustainability, Simplified. ILLOVO SUGAR AFRICA – ZAMBIA SOCIO-ECONOMIC IMPACT ASSESSMENT Executive Summary Zambia Sugar is a significant contributor to the country’s economy. It plays an important societal role, supporting significant direct and indirect employment in rural areas, providing financial support, technical assistance and capacity building to smallholder farmers, and supporting the Zambian government’s development agenda. This report is an update of a study carried out three years ago by Corporate Citizenship. It sets out key findings from an assessment
    [Show full text]
  • Smallholder Outgrowers in Irrigated Agriculture in Zambia
    AgWater Solutions Project Case Study Smallholder Outgrowers in Irrigated Agriculture in Zambia Lewis Bangwe Independent Consultant, Zambia Barbara van Koppen IWMI-South Africa September, 2012 Acknowledgment The authors and project partners wish to thank the Bill & Melinda Gates Foundation for the generous grant that made this project possible. The AWM Project The AgWater Solutions project was implemented in five countries in Africa and two states in India between 2008 and 2012. The objective of the project was to identify investment options and opportunities in agricultural water management with the greatest potential to improve incomes and food security for poor farmers, and to develop tools and recommendations for stakeholders in the sector including policymakers, investors, NGOs and small-scale farmers. The leading implementing institutions were the International Water Management Institute (IWMI), the Stockholm Environment Institute (SEI), the Food and Agriculture Organization of the United Nations (FAO), the International Food Policy Research Institute (IFPRI), International Development Enterprises (iDE) and CH2MHill. For more information on the project or detailed reports please visit the project website http://awm-solutions.iwmi.org/home-page.aspx or contact the AgWater Solutions Project Secretariat [email protected]. Disclaimer The findings and conclusions contained within are those of the authors and editors and do not necessarily reflect the positions or policies of the Bill & Melinda Gates Foundation. i Contents EXECUTIVE
    [Show full text]
  • Integrated Flow Assessment for the Kafue Flats
    THIS REPORT HAS BEEN PUBLISHED IN COLLABORATION WITH THE WATER RESOURCES MANAGEMENT AUTHORITY REPORT ZM 2018 Integrated Flow Assessment for the Kafue Flats Zambia: Phase 1 WATER RESOURCES DEVELOPMENT Integrated Flow Assessment for the Kafue Flats - Phase 1: Water Resources Developments Written by: Rowen Jani and Chanda Mwale Citation: WWF. 2018. Integrated Flow Assessment for the Kafue River. Phase 1:Water Resources Developments. WWF Zambia, Lusaka, Zambia Design: Keti Editorial Services Front cover photo: © WWF Printed by Printech Limited Published in March 2018 by WWF-World Wide Fund For Nature (Formerly World Wildlife Fund), Zambia. Any reproduction in full or in part must mention the title and credit the above-mentioned publisher as the copyright owner. © Text 2018 WWF All rights reserved ISBN 978 2 940529 80 3 WWF is one of the world’s largest and most experienced independent conservation organizations, with over 5 million supporters and a global Network active in more than 100 countries. WWF’s mission is to stop the degradation of the planet’s natural environment and to build a future in which humans live in harmony with nature, by: conserving the world’s biological diversity, ensuring that the use of renewable natural resources is sustainable, and promoting the reduction of pollution and wasteful consumption. While reasonable efforts have been made to ensure that the contents of this publication are factually correct and properly referenced, the findings, interpretations and conclusions expressed herein are those of the authors based on their scientific expertise and do not necessarily reflect the views of WWF. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgement on the part of WWF concerning the legal status of any territory.
    [Show full text]
  • Sugar Value Chain in Zambia: an Assessment of the Growth Opportunities and Challenges
    Asian Journal of Agricultural Sciences 6(1): 6-15, 2014 ISSN: 2041-3882; e-ISSN: 2041-3890 © Maxwell Scientific Organization, 2014 Submitted: September 18, 2013 Accepted: October 04, 2013 Published: January 25, 2014 Sugar Value Chain in Zambia: An Assessment of the Growth Opportunities and Challenges 1Thomson Kalinda and 2Brian Chisanga 1Department of Agricultural Economics and Extension, School of Agricultural Sciences, University of Zambia, Kalundu, Lusaka, Zambia 2Farming Systems, Social Sciences and Economics Division, Zambia Agricultural Research Institute, Chilanga, Zambia Abstract: The main objective of this study was to identify the major actors in Zambia’s sugar value chain and to assess the growth opportunities and constraints faced by the sub-sector. The study results show that the sugar sub- sector accounts for about 4% of the Gross Domestic Product and 6% of total national exports in Zambia. The sugar industry in Zambia is a monopolistic market structure dominated by one firm, Zambia Sugar Plc., which contributes over 90% of the total national sugar production. Zambia is one of the lowest cost producers of sugar globally. Growth in the sugar industry therefore holds great prospects for economic diversification and employment creation. Despite being a low cost sugar producer, growth of the sub-sector is constrained by high transaction costs. These include high fuel, electricity, transportation and distribution costs. Legislation on Vitamin A fortification of sugar also increases production costs and is a significant barrier to entry for potential entrants. Moreover, water rights and insecurity associated with customary land tenure have also emerged as major issues requiring attention to enhance investments into the sector.
    [Show full text]
  • SEA Study FINAL 13 01 10
    DELEGATION OF THE EUROPEAN COMMISSION ZAMBIA “Strategic Environmental Assessment (SEA) of the Sugar Sector in Zambia” Contract Nº 2009/209305 FWC BENEFICIARIES - LOT N° 6 SEA Study January 2010 This report has been prepared with financial assistance from the European Commission. The views expressed herein are those of the consultants and therefore in no way reflect the official opinion of the European Commission or the Government of Zambia. A contract implemented by AGRECO Consortium This contract is funded by ([email protected]) The European Union Strategic Environmental Assessment (SEA) of the Sugar Sector in Zambia SEA Study Prepared by: Juan Palerm (Team Leader) Tonnis Sierevogel Munguzwe Hichaambwa Strategic Environmental Assessment for the Zambia National Sugar Strategy SEA Study Table of Contents List of Tables................................................................................................................v List of Figures..............................................................................................................vi Acronyms and Abbreviations......................................................................................vii Acknowledgements.....................................................................................................xii 0. Executive Summary ...............................................................................................xiii PART I INTRODUCTION AND BACKGROUND...................................................1 1. Background...............................................................................................................1
    [Show full text]