ZAMBIA DEVELOPMENT AGENCY Energy Sector Profle Energy Sector Profile 1 ZDA Profile Zambia Development Agency he Zambia Development Agency is a statutory body established in 2006 by an act of Parliament (ZDA Act, No. 11 of 2006) and became operational in January 2007.It was set up in order to improve service Tdelivery by operationalising the concept of “One Stop Shop.” It operates as a semi-autonomous institution with its Board of Directors appointed by the Minister responsible for the Commerce, Trade and Industry. The primary objective of the Agency is “To foster economic growth and development by promoting trade and investment in Zambia through an efficient, effective and coordinated private sector led economic strategy. Mandate The Agency’s mandate includes facilitation of the economic development of Zambia by promoting investment and competitiveness of businesses and promoting exports from the country. It has the task of working with relevant authorities to reduce the cost of doing business in the country by simplifying the process of various formalities such as licensing. The Agency is also responsible for building and enhancing the country’s investment profile for increased capital inflows, capital formation, employment creation and promoting the growth of Micro, Small and Medium enterprise (MSME) sector by working with Government to create an investment climate that can propel long term sustainable domestic growth. Objectives 1. To increase and expand Non Traditional Exports by providing value addition and diverse products into existing and new markets. 2. To identify investment opportunities, attract and facilitate FDI, LDI and promote re-investment in the following sectors: Agriculture, Livestock, Fisheries and Forestry | Manufacturing | Tourism | Infrastructure | Energy | Mining 3. To promote the Growth and Development of the Zambia emerging private sector in order to Create Wealth and Generate Employment. 4. To provide Service Delivery in: • Promoting Local and Foreign Investment • Provision of Business Support in the growth and development if Small and Medium sizes Enterprises • Promote Export Development and Competitiveness • Implementing measures to provide efficiency in State Owned Enterprises • Acting as a vehicle of consultation with private sector and recommend trade and industry strategies. • Development and Facilitation of Multi Facility Economic Zones and Industrial Estates. Vision Statement A prosperous middle income Zambia with increased job opportunities for all. Mission Statement To promote and facilitate investment, trade and competitive entrepreneurship of businesses in Zambia. Goal statement To contribute to the creation of wealth and one million jobs through promotion and facilitation of investment, trade and enterprise development for the benefit of Zambians by 2020. Director General’s Office The office of the Director General guides Agency operations by providing the necessary strategic direction, policies, procedures and plans in order to advance economic development by promoting trade and investment in Zambia through am efficient, effective and coordinated private sector led economic strategy. ZDA Values The Agency endeavours to operate on the following positive values which guide personal and professional behaviour as well as attitudes of stuff: Purposeful, Accountable, Knowledgeable, Responsive and Team Spirit. For Further Information Contact: The Public Relations Manager Zambia Development Agency, Nasser Road, P.O. Box 30819, Lusaka. Tel: +260 211 229240/220177 | Fax: +260 211 225270 Email: [email protected] | Website: www.zda.org.zm ZDA: Promoting Zambia’s Economic Growth and Development 2 Energy Sector Profile TABLE OF CONTENTS 1.0. OVERVIEW OF ZAMBIA’S ENERGY SECTOR .............................................. 4 2.0. INVESTMENT OPPORTUNITIES IN THE ENERGY SECTOR IN ZAMBIA ... 4 2.1. ELECTRICITY ................................................................................................. 4 2.2. PETROLEUM .................................................................................................. 6 2.3. BIOFUELS ...................................................................................................... 7 3.0. 2.4. INVESTMENT COAL .............................................................................................................. INCENTIVES IN THE ENERGY SECTOR IN ZAMBIA ........ 108 4.0. 2.5. LICENCES RENEWABLE REQUIRED…………………… NUCLEAR ENERGY ................................................................ ................................................... 119 5.0. USEFUL CONTACTS OF AGENCIES RESPONSIBLE FOR INVESTMENTS IN THE ENERGY SECTOR ....................................... 11 Energy Sector Profile 3 1.0. OVERVIEW OF ZAMBIA’S ENERGY SECTOR ambia’s energy sources include; electricity, petroleum, coal, biomass, and renewable energy. It is only petroleum which is wholly imported in the country, while the country is basically self-sufficient in all the other energy resources, as it has substantial unexploited reserves of these forms of energy.The country’s economy has been growing at an average of 5 percent per annum over the past 10 years and demand for energy has also been rising. The demand for the most important energy source in the country - electricity has been growing at an average of about 3 percent per annum mainly due to the increased economic activity in the country especially in the agriculture, manufacturing and mining sectors, as well as increased activity in the region. Furthermore the country’s growing economy has also lead to an increase in the demand for the Zother forms of energy such as petroleum and coal, as these are key factors of production and operations in most economic sectors. The demand for renewable energies has also seen significant growth in the recent years as the market explores alternative sources of energy, with renewable energies2.0. INVESTMENT proving to be a viable OPPORTUNITIES alternative. IN THE ENERGY SECTOR IN ZAMBIA There is enormous potential for investment opportunities in the energy sector to meet the country’s demand for the various forms of energy. Investment opportunities exist in the energy sector in; electricity2.1. ELECTRICITY generation, petroleum, coal, and renewable energies. 2.1.1 Installed Electricity Generation Capacity - Supply Hydro power is the most important energy source in the country after wood fuel contributing about 10 percent to the national energy supply. It is estimated that Zambia possesses 40 percent of the water resources in the Southern African Development Community. Zambia has about 6,000 MW unexploited hydro power potential, while only about 2,434.3 MW has been developed. On the other hand, the demand for power in the various sectors of the economy has grown rapidly over the years. No Power Station Installed Capacity Type of Operator Generation 1 Kafue Gorge 990 Hydro ZESCO 2 Kariba North Bank 1,080 Hydro 3 Victoria Falls 108 Hydro 4 Lunzua 14.8 Hydro ZESCO 5 Lusiwai 12 Hydro ZESCO 6 Chishimba Falls 6 Hydo ZESCO 7 Musonda Falls 5 Hydro ZESCO 8 Lunzua 0.75 Hydro ZESCO 9 Lusemfwa and Mulungushi 56 Hydro Lusemfwa Hydro Corp. 10 Zengamina 0.75 Hydro Charles Rea 11 Gas Turbine (Standby) 80 Diesel Copperbelt Energy Corp. 12 Dangote 30 Coal Fired Dangote Cement PLC Total Installed Capacity 2,434.3 13 Ndola Energy 50 HFO Ndola Energy Table 2.1: Installed Generation Capacity in Zambia 2.1.2 Electricity Demand A. Local Demand Zambia has been experiencing positive economic growth in the recent past with an average real GDP growth rate of 6.4 percent recorded between 2011 and 2015. The Economic Expansion has led to an increase in demand for power. As a result of expansion in economic activities especially in the mines, the peak demand for electricity in Zambia increased from 1,100 MW in 2001 to 1,600MW in 2009 while the country’s installed generation capacity is 2,434 MW.The growth in demand is estimated to be between 150 MW and 200MW per annum. Given these factors, the demand for electricity in the country is expected to exceed 2,500 MW by the year 2020. (Refer to Figure 2.1.2). 4 Energy Sector Profile Figure 2.1.2: Electricity Demand Forecast in Zambia (2005 to 2020) B. Regional Demand Electricity consumption by the Southern African Power Pool (SAPP) is about 50,000 MW per annum. The SAPP has an installed capacity of 55,000 MW and its membership comprises Botswana, DRC, Lesotho, Mozambique, Namibia, South Africa, Swaziland, Zambia, and Zimbabwe. The highest consumer of electricity in the region is South Africa with an average growth rate of 3 percent per year. Other leading consumers in the region are Zimbabwe (with a growth rate of 2 percent), Zambia (with a growth rate of 3 percent) and the Democratic Republic of Congo (DRC) with a growth rate of 3 percent. Angola has the highest annual growth rate of 11 percent with a consumption of 593 MW per annum. The annual growth rate of overall electric power consumption in the SAPP averages 5 percent per annum, and the Tableregional 2.1.2: demand Electricity is Demand likely to in reachthe Southern 80,000 Africa MW Region per annum by year 2015. Country Main Utility Installed Capacity (MW) Estimated Annual % Growth in Demand Demand (MW) Angola ENE 1,128 593 11% Botswana BPC 132 510 6% DRC SNEL 2,442 1,335 3% Lesotho LEC 72 114 3% Malawi ESCOM 302 303 4% Mozambique EDM 2,330 462 7% Namibia Nampower 393 476 5% South Africa ESKOM 43,061 37,365 3% Swaziland SEB 51 251 5% Tanzania TANESCO 1,186 793 8% Zambia ZESCO 1,985 1,700 6% Sources:SADCTOTAL