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REMP for Zambia Final Report 01

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REMP for Zambia Final Report 01 No. The Study for Development of the Rural Electrification Master Plan in Zambia Final Report January 2008 Japan International Cooperation Agency (JICA) E D J R 08-002 PREFACE In response to a request from the Government of the Republic of Zambia, the Government of Japan decided to conduct a study for development of Rural Electrification Master Plan in Zambia and entrusted to the study to the Japan International Cooperation Agency (JICA). JICA selected and dispatched a study team headed by Mr. Hitoshi Koyabu of Tokyo Electric Power Co., Inc. and consists of Tokyo Electric Power Co., Inc. between May 2006 and January 2008. The team held discussions with the officials concerned of the Government of Zambia and conducted field surveys at the study area. Upon returning to Japan, the team conducted further studies and prepared this final report. I hope that this report will contribute to the promotion of this project and to the enhancement of friendly relationship between our two countries. Finally, I wish to express my sincere appreciation to the officials concerned of the Government of Zambia for their close cooperation extended to the study. January 2008 Seiichi NAGATSUKA, Vice President Japan International Cooperation Agency January 2008 Mr. Seiichi NAGATSUKA Vice President Japan International Cooperation Agency Tokyo, Japan Letter of Transmittal We are pleased to submit to you the report of the Study for Development of Rural Electrification Master Plan in Zambia. The report reflects the comments made by Department of Energy, Ministry of Energy and Water Development in Zambia, Rural Electrification Authority and related institutions in the Republic of Zambia, as well as the advice of the related institutions of the Government of Japan. This report presents appropriate rural electrification planning and recommendations on power system development from the viewpoint of financial perspective and environmental and social considerations in Zambia. Specifically, we evaluate the financial aspects of the plan on the basis of Least Life Time Costs calculated from the results of our field demand survey, and consider the system reliability and environmental friendliness. We firmly believe that it will help promote the rise in standards of living and industrial development in the country. We wish to take this opportunity to express our sincere appreciate to the officials concerned of JICA, Ministry of Foreign Affairs and Ministry of Economy, Trade and Industry. We would also like to express our gratitude to the officials concerned of the Government of Zambia, Department of Energy, Ministry of Energy and Water Development in Zambia, Rural Electrification Authority, JICA Zambia Office and Embassy of Japan in the Republic of Zambia for their cooperation and assistance throughout our field survey. Very truly yours, Hitoshi KOYABU Team Leader, The Develop for Rural Electrification Master Plan in Zambia The Study for Development of the Rural Electrification Master Plan in Zambia Final Report Table of Contents Page Lists of Tables and Figures Acronyms Chapter 1. Introduction.................................................................................................1-1 1.1. Background........................................................................................................................ 1-1 1.2. Purpose of the Study .......................................................................................................... 1-1 1.3. Scope of Works.................................................................................................................. 1-2 1.4. Study Flow and Schedule................................................................................................... 1-2 1.5. Study Team........................................................................................................................ 1-2 1.6. Outline of Report ............................................................................................................... 1-3 Chapter 2. General Profile of Zambia...........................................................................2-1 2.1. Land................................................................................................................................... 2-1 2.2. Administrative Organization and Local Social Structure.................................................... 2-1 2.3. Population.......................................................................................................................... 2-1 2.4. Ethnic Composition, Language and Religion ..................................................................... 2-4 2.5. Fertility, Mortality and Life Expectancy ............................................................................ 2-4 2.6. Education and Literacy ...................................................................................................... 2-5 2.7. Poverty and Living Standards ............................................................................................ 2-7 Chapter 3. Current Status of the Power Sector...........................................................3-1 3.1. Policy and Organizations ...................................................................................................3-1 3.1.1. History of Electrification and Policy ........................................................................ 3-1 3.1.2. Key Players of the Power Sector .............................................................................. 3-2 3.1.3. Acts Related to Rural Electrification ........................................................................ 3-3 3.1.4. Policy Related to the Renewable Energy .................................................................. 3-3 3.2. Rural Electrification Fund and Its Management ................................................................. 3-6 3.2.1. Rural Electrification Fund Scheme in Zambia .......................................................... 3-6 3.2.2. REA’s Budget .......................................................................................................... 3-7 3.2.3. The Way Forward................................................................................................... 3-10 3.2.4. Rural Electrification Programme in Kenya............................................................. 3-11 3.3. Power Supply and Demand .............................................................................................. 3-13 3.3.1. On-grid Power Plants ............................................................................................. 3-13 3.3.2. Off-grid Power Plants............................................................................................. 3-15 3.3.3. Supply and Demand Balance (National Grid)......................................................... 3-21 i 3.3.4. Seasonal and Daily Characteristics of Power Demand............................................ 3-23 3.3.5. Power System Loss................................................................................................. 3-25 3.3.6. Electricity import/Export........................................................................................ 3-26 3.4. Electricity Tariff .............................................................................................................. 3-29 3.4.1. Electricity Tariff Structure...................................................................................... 3-29 3.4.2. Metering and Billing............................................................................................... 3-32 3.5. Financial Status of the Power Sector................................................................................ 3-34 3.5.1. Financial Status of ZESCO..................................................................................... 3-34 3.5.2. Financial Status of Other Players in the Sector....................................................... 3-38 Chapter 4. Current Situation of Rural Society.............................................................4-1 4.1. Functions of Rural Growth Centres and Local Communities ............................................. 4-1 4.2. Economic Activity in Rural Areas and Expected Effects after Electrification.................... 4-2 4.3. Rural Electrification and Energy Consumption .................................................................. 4-2 4.4. Rural Development Plan .................................................................................................... 4-4 4.5. Selection of Electrification Target...................................................................................... 4-4 4.6. Collected Sample Sizes...................................................................................................... 4-9 4.7. Ability and Willingness to Pay......................................................................................... 4-11 4.7.1. Methodology to Assess Ability to Pay for Monthly Tariff...................................... 4-11 4.7.2. Evaluation of Ability to Pay for Monthly Tariff ..................................................... 4-12 4.7.3. Methodology to Assess Willingness to Pay ............................................................ 4-16 4.7.4. Willingness to Pay for Monthly Tariff.................................................................... 4-16 4.7.5. Willingness to Pay for Initial Cost.......................................................................... 4-18 4.8. Prioritized Property for Electrification
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