INVESTMENT OPPORTUNITIES IN ENERGY

A Presentation made to the National Association of Regulatory Utility Commissioners (NARUC)

9th December 2008

PRESENTATION BY

ZAMBIA DEVELOPMENT AGENCY

ENERGY INVESTMENT CONTENTS

¾ GEOGRAPHY ¾ PETROLEUM INVESTMENT OPPORTUNITIES ¾ BIOFUEL INVESTMENT OPPORTUNITIES ¾ ELECTRICITY INVESTMENT OPPORTUNITIES ¾ RENEWABLE ENERGY INVESTMENT OPPORTUNITIES ¾ COAL INVESTMENT OPPORTUNITIES

ENERGY INVESTMENT ZAMBIA GEOGRAPHY

• Centrally located in central Southern Africa, with 8 neighbours • Significant land (752,000 square Km), mineral and water resources • Has population of 10 Million people • Is self sufficient in all energy requirements except petroleum

ENERGY INVESTMENT PETROLEUM INVESTMENT OPPORTUNITIES

DOWNSTREAM PETROLEUM SECTOR

• Construction of 50 million litre pet storage terminal in Lusaka on BOT basis.

• Investment in the INDENI petroleum refinery through purchase of at least 20% shareholding.

ENERGY INVESTMENT BIOFUEL INVESTMENT OPPORTUNITIES

• Zambia has suitable climate for biofuels, vast Land (752,000 square km) and 30% of the fresh water resources in SADC region. • 42 Million Hectors of the land is arable and only 11% is utilised. • Projections show that only 11% of the arable land would be required to satisfy the country's diesel consumption of 360 million litres per annum with bio diesel. • The country also has good potential for ethanol production from sugar cane or sweet sorghum. Zambia is one of the lowest production costs for sugar cane. • Govt. in process of declaring biofuels sector a priority sector so that investors in the sector could benefit from the Zambia Development agency incentives which include tax waivers on capital equipment. • Govt. has also revised Energy Policy to accommodate biofuels in national development agenda as well as enact legislation for administration of the sector.

ENERGY INVESTMENT ELECTRICITY INVESTMENT OPPORTUNITIES

• The country has installed capacity of 1,760 mw. ¾ Hydro is 1,672mw and ¾ thermal is 88mw • The country hydro potential 6 000 MW.

STRATEGICENERGY INVESTMENT OIL RESERVES POTENTIAL LARGE HYDRO POWER PROJECTS FOR DEVELOPMENT (Cont’ A) Project name Estimated Location Status Capacity

Kafue Gorge Lower 750 MW Open for investment {IFC as a transaction adviser} Itezhitezhi 120MW Kafue River ZESCO has partnered with TATA Group of Companies to develop the project. Kariba North 360MW River ZESCO /SINO- HYDRO Extension Negotiating the Kalungwishi 210 MW Kalungwishi river Implementation Agreement with the potential developer. POTENTIAL LARGE HYDRO POWER PROJECTS FOR DEVELOPMENT (Cont’ B) Project name Estimated Location Status Capacity Luapula Hydro 950 MW Luapula Open for investment Two sites;(Mombututa & Mambilima) River Lusiwasi Hydro 40 - 50 MW Lusiwasi Open for investment River Batoka Gorge Hydro 800 MW Zambezi Open for investment River 34 MW Kabompo CEC /TATA Kabompo Gorge Hydro River

Devils Gorge Hydro 800 MW Zambezi Open for investment River POTENTIAL SMALL HYDRO POWER PROJECTS FOR DEVELOPMENT

Project name Estimated Location Status Capacity

3.5 MW Kabompo Open for investment Chikata falls Hydro River 2.5 – 3.5 MW Negotiating with a West Lunga Hydro Private Investor

Chavuma Falls Hydro 10 MW Zambezi Open for investment River Lufupa Hydro 2.5 MW Lufupa River Open for investment RENEWABLE ENERGY INVESTMENT OPPORTUNITIES

Solar installations in Eastern Zambia • Growing demand for renewable energy • Demand driven by high cost of grid extension in sparsely populated areas. • Solar PV energy service companies have been successfully implemented in the Eastern part of Zambia • Other opportunities include, biomass gasification, biogas, wind energy for water pumping, and small hydro power (there are a lot of small hydro sites in Zambia)

ENERGY INVESTMENTS COAL INVESTMENT OPPORTUNITIES

• Encourage energy mix; Coal could become a major source of power generation • The country has about 60 Million tonnes of proven coal reserves • The Zambezi valley has potential of billions of tones of coal reserves

ENERGY INVESTMENTS CONCLUSION

Zambia is a prime energy investment destination. Investors should hurry while opportunities are still available.

ENERGY INVESTMENTS END

THANK YOU !

ENERGY INVESTMENTS