1. CHALLENGES AND INVESTMENT OPPORUNITIES: THE CASE OF ZESA By Mr Ikhupuleng Dube, System Development Manager – Zimbabwe Electricity and Transmission Company (ZETDC), a subsidiary of ZESA Holdings (Pvt) Ltd Presented at the Worldbank CCS Workshop Johannesburg 31 st May– 1 st June 2011

2. Presentation Content Electricity Sector Policy, Governance Structure and Players Importance of Electricity in Promoting Economic Growth Current Challenges  Security of Supplies  Reliability of Supplies Investment Opportunities  Generation  Grid  Other

3. Electricity Sector Policies Ensure availability and accessibility of electricity to all consumers (current and future) at competitive prices; and Facilitate electricity investments and access by Independent Power Producers (IPPs), Public Private Partnerships (PPPs), Private Public Associations (PPAs) and other forms of joint ventures into the sector.

4. Electricity Subsector Structure

5. ZESA Holdings  Holds shares of the successor companies on behalf of the Government  Have four subsidiaries  Zimbabwe Power Company (ZPC)  Zimbabwe Electricity Transmission and Distribution Company (ZETDC)  Powertel  ZESA Enterprises

6. ZESA Main Mandate To supply all sectors of the economy with adequate, safe, reliable environmental friendly and least cost electrical energy. – Strong linkages between electricity supply and economic growth.

7. Linkages between Electricity and Economic Growth

8. Linkages between Electricity Supplies and Productivity SectorUnit US$ per un- served unit of electricity Proposed Tariff (US$/kWh) Agriculture[kWh/US$]0.6890.13 Construction[kWh/US$]0.0700.12 Mining[kWh/US$]4.6430.079 Manufacturing[kWh/US$]0.6560.084 - of basic materials [kWh/US$]0.498- - of machinery and equipment.[kWh/US$]1.371- - non-durable goods [kWh/US$]1.506- - of miscellaneous goods.[kWh/US$]1.937-

9. Main challenges Lack of investment in generation leading to demand outstripping supply Vandalism of infrastructure Ageing equipment limited maintenance and refurbishment challenges Reliability of supply and customer connection challenges Power wheeling challenges Power quality challenges (need for compensation equipment) Low tariffs, revenue collection and financing challenges Inefficient usage of electricity Access to electricity challenges Lack of investment in generation leading to demand outstripping supply Vandalism of infrastructure Ageing equipment limited maintenance and refurbishment challenges Reliability of supply and customer connection challenges Power wheeling challenges Power quality challenges (need for compensation equipment) Low tariffs, revenue collection and financing challenges Inefficient usage of electricity Access to electricity challenges

10. Domestic Supply and Demand Challenges

11. Supply and Demand Challenges – Summer Day Item 1Kariba750 MW Item 2Hwange500 MW Item 3STP60 MW Item 4Imports150 MW Item 5Total 1 to 4Total Generation Available1460 MW Item 6 National Average Unsuppressed Summer Demand1860 MW Item 7Capacity Committed to Essential Services750 MW Item 8 Available Capacity after commitment to Essential Services710 MW Item 9Nampower Exports150 MW Item 10 Available Capacity after Nampower Commitments560 MW Item 11 Item 6-Item 7- Item 9 Public Demand Excluding after Exports and Essential Services960 MW Item 12Item 10 -Item 11Deficit-400

12. Supply and Demand Challenges – Winter Day Item 1Kariba750 Item 2Hwange500 Item 3STP60 Item 4Imports150 Item 5Total 1 to 4Total Generation Available1460 Item 6National Unsuppressed Winter Demand22100 Item 7Capacity Committed to Essential Services750 Item 8 Available Capacity after Commitment to Essential Services710 Item 9Nampower Exports150 Item 10 Available Capacity after Nampower Commitments560 Item 11 Item 6-Item 7- Item 9 Pubilc Demand After Exports and Committed Services1200 Item 12Item 10 -Item 11Deficit-640

13. Reduced availability of Imports Challenges

14. Historical Trends of Electricity Import by ZESA (MW) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

15. Factors Affecting Load Growth Suppressed demand due to load shedding (2591GWh in 2008) Investment due to large mining customers (almost 800MW in the medium term) Resuscitation of production levels by large users (currently suppressed demand of 340MW) Access to electricity by urban households (estimated at 60MW yearly for the next 15 years starting in the medium term) Rural electrification (total load of 420MW) General economic growth (linkages between productivity and energy consumption) Demand due to services such as public lighting, water pumping etc. Resuscitation of production levels in the agricultural sector. Increase in demand due to improved consumer lifestyles

16. Future Demand and Supply Balance

17. Availability Energy Resources to Meet Demand - Coal

19. Coal Policy Issues To ensure adequate and reliable supplies of coal in a cost effective and sustainable manner; To ensure environmentally friendly exploitation methods; To explore the techno-economic feasibility of new coal technologies such as coal gasification, carbon capture and coal-to-liquid conversion;

20. Availability of Energy Resources to Meet Demand - Hydro SiteCapacity (MW) Batoka Gorge1600 Devil's Gorge1240 Mupata Gorge1000 Small Hydro300

22. Other Available Energy Sources Coal bed Methane - estimated at more than 600 billion cubic metres (further exploration to confirm amount of gas). Forest residues - almost entirely based on plantation timber;70,000 tons of this biomass waste is produced annually. Energy Crops - in the next four years 150MW to be generated from energy crops.

23. Security of Supplies Investments Project NameCapacity MWEstimated Investments Costs (US$ Million) Indicative timing Short Term Solutions Hwange Improvements 200US$1252012 Repowering of Small Thermals 200US$120 DSM Projects300US$9 – US$ 252011-2013 Renewable Energy Sources 200TBA2011- 2015 Bridging Imports400 Medium Term Solutions Kariba South Extension 300US$3002016 Hwange Extension600US$10002016 Long Term Solutions Gokwe North Project 1400US$22402017 Batoka Project800US$22002021

24. Transmission and Sub-transmission Investment Requirements $million 1.1. Transmission Network (330/420 kV) 1.Power Plant Related Network 2.Wheeling Related Network 3.Substation Upgrade Sub-total 170 258.5 82.9 510.5 2. Sub-transmission Network (88/132 kV) 2.1 REA Related Network 2.2 Network Up-rate 2.3 Substation Upgrade 2.4 Control and Communication System 2.5 Spare and Tools Sub-total Total 106.8 97.1 17.4 59.2 79.4 359.9 870.4

25. Distribution Refurbishment and Extension Cables and conductors – US$25 mil Transformers – US$169 mil Prepaid meters and MCBs – US$64 mil Tools and Equipment – US$4 mil Operational Vehicles – US$46 mil