Zambia signs financing deal with World Bank to fund electricity services

Oct 24, 2008 02:00 AM

The Zambian government signed a $ 75 mm financing agreement with the World Bank to provide electricity services to 65,000 new customers, in a country where power cuts have almost become the norm.
The project will improve the existing distribution network of the Zambia Electricity Supply Corporation (ZESCO), the parastatal power utility. It will also promote the use of energy-efficient fluorescent lamps, extend the existing grid in selected areas of the country, and provide small power sources such as diesel units and solar systems.

Zambia has a national electrification rate of just 20 %; among the rural population only 2 % have access to the grid, and frequent equipment breakdowns mean ZESCO delivers far less power than its installed capacity.
No new major power plants have been put online since the 1970s; playing catch-up and extending electrification to 66 % of the 12 mm population by 2030, as the government intends, will cost $ 2 bn. But the rapid development of energy-gobbling coppermines in recent years, which has helped fuel Zambia's 6 % growth rate, has pushed an already underperforming power supply system to breaking point.

ZESCO has tried to protect the mining industry, which absorbs 20 % of power supplies, by targeting domestic consumers for power cuts, typically lasting up to three hours a day. The wider economy is suffering.
"Our building pattern means that residential and commercial sectors are side-by-side. Mining may be spared [from load shedding] but our future development means we need to increase the levels of supply," consultant economist Oliver Saasa told.

Speeding up rural electrification will also help kick-start development.
"The low access rate for power has inhibited economic advancement and diminished quality of life," the World Bank said in its project overview. "This project aims to provide electricity services to 65,000 new customers, including households, public facilities (schools, clinics, churches, etc.), and commercial establishments (farm blocks, agriculture processing mills, water pumping, shops, etc.), benefiting a total population of 550,000 inhabitants."

With its significant hydropower potential, Zambia should be a net exporter of electricity to the region through the Southern Africa Power Pool (SAPP).
But, due to the current power shortage, ZESCO is importing at increasingly punishing tariff rates.

This report does not necessarily reflect the views of the United Nations.

Source / UN Integrated Regional Information Networks
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