The energy sector in Zambia is regulated by the
Energy Regulation Board (ERB) under the
provisions of the Energy Regulations Act, Chapter
436 of the laws of Zambia and a number of
regulations which are discussed below.
ERB was established to regulate activities in the
energy sector including electricity, fossil fuels
(petroleum) and other forms of energy such as
solar and coal, through specialised licences it
would issue. ERB also regulates the refining,
marketing, importation and transportation of
crude oil and finished petroleum products under
the petroleum sub-sector.
Due to the conducive investment environment
created by Government and the ERB, there are
now an estimated twenty-one (21) oil marketing
companies operating in Zambia, according to
ERB.
Zambia?s total petroleum requirements are met
through imports because the country does not
have any proven crude oil reserves. However, we
wish to point out that the Government recently
published an invitation to tender for petroleum
exploration licences. The Government has
divided the country into a number of blocks for
the purposes of inviting international petroleum
companies to explore for oil and gas.
The petroleum industry in Zambia is made up of
TAZAMA Pipelines Limited, which is owned by the
Governments of Zambia and the United Republic
of Tanzania, and a company called Indeni Oil
Refinery (Indeni). The downstream also
comprises various fuel transporters and dealers
contracted by Oil Marketing Companies (OMCs) to
transport fuel by road from the fuel terminal and
operate service stations, respectively.
The wholesale petroleum prices are regulated by
ERB, due to the monopolistic nature of the
industry. Indeni currently carries out the
importation of feedstock. The feedstock is
commingled crude oil. With respect to pump
prices, the Government liberalised pump prices in
June 2001 as part of its economic reforms. ERB
therefore takes on an ex-post monitoring role for
pump prices whilst regulating ex-refinery gate
prices. There are established margins for, OMCs,
dealers and transporters, and ERB ensures that
prices remain in a reasonable band to ensure that
the consumer is not overcharged.
The objectives of ERB are to issue licences under
the ERB Act, to monitor the efficiency and
performance of the undertakings, to receive and
investigate complaints from consumers, and to
develop and implement appropriate rules to
promote competition in the energy sector.
The energy sector in Zambia is regulated by
various pieces of legislation which include the
following:
1. Electricity Act Chapter 433, Volume 24 of the
Laws of Zambia.
2. The Rural Electrification Act No. 20 of 2003.
3. The Environmental Management Act No. 12 of
2011.
4. The Petroleum (Exploration and Production)
Act No. 10 of 2008.
5. The Income Tax Act Chapter 323, Volume 19
of the Laws of Zambia.
6. The Customs and Excise Act Chapter 322,
Volume 18 of the Laws of Zambia.
7. The Standards Act Chapter 416, Volume 23 of
the Laws of Zambia.
8. The Zambezi River Authority Act Chapter 467,
Volume 26 of the Laws of Zambia.
9. The Weights and Measures Act Chapter 403,
Volume 23 of the Laws of Zambia.
0. The Preservation of Public Security Act
Chapter 112, Volume 9 of the Laws of Zambia.
1. The Energy Regulation (Marking and
Transportation of Petroleum) (Revocation)
Regulation Act No. 36 of 2004.
2. The Competition and Fair Trading Act No. 24
of 2010.
3. The Forests Act No. 4 of 2015.
4. The Water Act No. 21 of 2011.

Zambia has abundant renewable and non-
renewable energy resources, including industrial
minerals such as coal, agricultural land to support
biofuels, ample forest for biomass, abundant wind
for wind energy, and long and intense hours of
annual sunlight to support solar energy
generation.
However, the major source of energy used in
Zambia is wood fuel, which is mainly consumed
by households. Electricity, petroleum and coal
are mainly used in commerce and industry.
Wood fuel
Traditional wood fuels (biomass) such as
charcoal and firewood dominate energy
consumption in Zambia.
Forms of wood fuel products used in Zambia
The main sources of wood fuel in Zambia are
trees from forests. Wood fuel comprises firewood
and charcoal.
Usage
Wood fuel is primarily used by people living in
rural areas and in high-density areas and peri-
urban areas.
Prevailing factors in the wood fuel energy sector
in Zambia
Zambia has one of the highest rates of
deforestation in the world, estimated at around
250,000 and 300,000 hectares annually, according
to the Integrated Land Use Assessment (ILUA)
conducted by the Zambian government in 2008.
This annual rate of deforestation has largely been
a result of agricultural expansion, infrastructure
development, wood extraction and fires.
Although there are varying factors that cause
forest cover change, there are some other
underlying factors that continue to cause forest
loss and degradation, such as charcoal
production.
The electricity shortage that Zambia is currently
experiencing will undoubtedly have a substantial
bearing on the annual rate of deforestation.
Over the years, demand for charcoal from urban
areas has grown exponentially, making charcoal
the second source of energy for the burgeoning
urban population.
In most urban areas where charcoal is used,
demand is driven by poverty and limited
availability of affordable and cleaner energy
alternatives. In the city of Lusaka, about 85% of
urban households use charcoal, compared to 15%
in rural areas, according to the Centre for
International Forestry Research (CIFOR).
In 2008 alone, the ILUA estimated that 5.8 million
tonnes of wood biomass were used to produce
charcoal.
According to the Zambia Development Agency
(ZDA) in its profile on the Zambia Energy Sector,
the figures above are set to increase, given the
prevailing electricity shortages and the yawning
gap between energy supply and demand in
Zambia.
Electricity
Currently, there are three main electricity
companies in Zambia: the state-owned ZESCO
Ltd the Copperbelt Energy Corporation (CEC)
North-Western Energy Corporation (NWEC) the
Lusemfwa Electricity Company (LEC) and
Maamba Collieries Ltd.
At present, ZESCO is the largest, and unequalled,
electricity company in Zambia, running and
operating power stations, transmission lines and
distribution networks.
The electricity utility in Zambia is under the
jurisdiction of the Ministry of Energy and Water
Development (MEWD) and operates based on the
policies established by MEWD. ERB, under the
Ministry, supervises the power companies in
accordance with the ERB Act.
Forms of electricity products used in Zambia
Electricity in Zambia is currently generated from
mainly hydro power − although thermal power and
solar power are now coming on stream, as we
shall discuss later in this paper.
Usage
According to the ZDA in its Zambia Energy Sector
Profile publication of 2014, the total installed
Electricity Generation Capacity of Zambia is 2,347
MW, with hydropower being the most predominant
energy source in the country at 2,259 MW (96%),
followed by diesel contributing about 4% to the
national energy supply.
The hydropower stations supply the national grid
while the diesel power generating plants supply
isolated loads, mainly in remote areas not
connected to the grid. The gas turbines, located
in the Copperbelt, provide standby supply to the
mines.
Of the hydro power plants, Kafue Gorge has the
highest installed capacity of 900 MW. Kafue
Gorge accounts for 56% of the main hydro
installed capacity, followed by Kariba North Bank
with 37%, and Victoria Falls with 7%.
The total capacity of mini hydros in Zambia is 23
MW, while diesel generators have a combined
capacity of 8 MW.
According to the ZDA, the demand for electricity in
the country has been growing at an average of
about 3%, or between 150 and 200 MW, each
year.
Generally hydro power is the most important
energy source in the country after wood fuel,
contributing about 10% to the national energy
supply. However, there has not been any major
addition to the country?s generation capacity in
the last 20󈞊 years despite the huge potential in
hydro resources. It is estimated that Zambia
possesses 40% of the water resources in the
Southern African Development Community.
Zambia has about 6,000 MW unexploited hydro
power potential, while only about 2,177 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.
Diesel power stations comprise Chavuma
Zambezi Kabompo Mufumbwe Mwinilunga
Lukulu Shang?ombo and Luangwa. The total
installed capacity for diesel power stations was
11.3 MW in 2014 compared to 10.6 MW in
2013.
Total generation sent out from ZESCO?s diesel
power stations reduced by 6.5% between 2013
and 2014. In 2014, national electricity
consumption reduced marginally by 1.2%, from
10,845.7 GWh in 2013 to 10,720.5 GWh in 2014.
The reduction was mainly on account of the
slowdown in mining activities and outages for
non-mining customers. The largest consumers of
electric energy were the mining industry and
domestic sector (residential) which accounted for
54.8% and 30.3% of total consumption in 2014,
respectively. The rest of the economic sectors
collectively consumed the 14.9% balance.
ZESCO engages in cross-border trading of
electricity through the Southern African Power
Pool (SAPP) and bilateral markets. During the
year 2014, ZESCO recorded a 16% increase in
electricity exports, moving from 1,083.4 GWh in
2013 to 1,256.3 GWh in 2014. However,
electricity imports declined drastically by 82.4%,
from 72.9 GWh in 2013 to 12.8 GWh in 2014.
The increase in exports and the significant
reduction in imports were attributed to new
generation projects that were commissioned in the
year.
Prevailing factors in the electricity energy sector
in Zambia
Despite abundant hydro-power generation, only
20% of the population has access to electricity,
mainly due to high installation costs and the
location of most areas far from the national grid
system.
In mid-June 2015, Zambia found itself on the
verge of a crippling electricity shortage. The
country started grappling with a 560 MW power
deficit, and to date the situation has not changed,
as demand for electricity grows to 200 MW
annually.
ZESCO has embarked on a countrywide power
rationing scheme in its efforts to maximise the
power generated from limited water.
The shortage of electricity has been building for
some time but has become more pronounced with
reduced water levels at Kariba North Bank Power
Station, Kafue Gorge Power Station and Victoria
Falls Power Station.
Petroleum
Zambia is self-sufficient in all its energy sources
with the exception of petroleum, which contributes
about 9% to the national?s total energy
requirements, particularly in the agriculture,
transport, and mining sectors.
According to the ZDA, Zambia?s demand for petrol
is around 52 million litres per month and demand
is projected to grow at an average of about 40%
per year.
The country imports all its petroleum
requirements through the 1,705 km-long TAZAMA
Pipelines, owned by the Governments of Zambia
(67%) and Tanzania (33%).
The oil is then refined at the Indeni Refinery in
Ndola (Copperbelt Province), with a current
capacity of 850,000 metric tons per year, which is
jointly owned by the Government of Zambia and
an international oil company, Total Outre Mer.
The 21 Oil Marketing Companies (OMCs)
currently registered in Zambia then take the
finished products from the Ndola Fuel Terminal to
sell them.
Zambia, which had undertaken unsuccessful oil
and gas exploration initiatives between 1986 and
1991, recently launched new explorations covering
the entire country. In March 2016, the
Government invited bids for exploration of oil and
gas.
Forms of Petroleum products used in Zambia
Unleaded Petrol, Automotive Gas Oil, Industrial
Kerosene, Domestic Kerosene, Jet A-1, Liquefied
Petroleum Gas, Reformate, Fuel Oil and
Asphalt.
Usage
Most, if not all, petroleum products are largely
used by the transport sector. The highest
consumer of petroleum products in the country is
the transport sector accounting for 53%, followed
by the mining sector with 27%.
Prevailing factors in the petroleum energy sector
in Zambia
Zambia occasionally experiences disruptions in
the supply of petroleum products. The most
common is caused by the annual maintenance
programme for the Indeni Refinery. Other minor
factors include work stoppage by drivers of oil
tankers, as was the case in January 2016. During
this period, the drivers were not uplifting any
petroleum products from the fuel depots, which
led to a temporary shortage of petroleum products
at pumps however, this had no effect on the
pump price.
Other factors affecting the petroleum energy
sector in Zambia include the global fall of oil
prices, which saw the price of crude oil fall below
50 US$ per barrel.
The sharp worldwide fall in the price of oil was
not receptive to the Zambian economy as, despite
the sharp fall of the crude oil price on
international markets, the pump price for
petroleum products in Zambia has remained the
same.
The reason for this position was stated by the
Minister of Energy and Water Development, Ms
Dora Siliya, in her Ministerial address to
Parliament on Friday, 19th February, 2016.
She attributed the situation above to two major
determinants to wholesale and pump prices:
international oil prices and the foreign exchange
rate of the Zambian kwacha to the United States
(US) dollar. She pointed out that any significant
changes in these two factors should trigger a
price adjustment. Sometimes, the impact of the
two determinants cancels out, resulting in
minimal impact on the pump price.
The other factors that can trigger a price change
are the ERB adjustments to petroleum value-chain
fees and charges, such as pumping fees,
processing fees and margins for transporters,
OMCs and dealers.
Coal
Coal is an important source of energy for the
mines and industry in Zambia. However,
despite its large reserves the country has had no
coal-fired plants until the Maamba Collieries
Thermal Plant, which is located in Sinazongwe
district and expected to be commissioned at the
end of 2016. On full completion, the thermal
power plant is expected to cost US$ 800m so far,
according to a press statement issued by the
Chief Executive Officer, Venkat Shankar, US$
270m has been used for construction of phase
one, and the plant will generate 300 MW of power
to feed into the national grid, for distribution by
ZESCO.
The future of coal-fired plants depends on
exploration of coal deposits. Most of the
exploration for coal undertaken hitherto has been
in the Gwembe Valley and in the Kafue Basin.
The Sinazongwe area is being mined currently
and more detailed explorations are required within
the Gwembe Valley and the other known areas to
reveal further coal deposits. There is also
potential for coal bed methane within the proven
and potential coal reserves.
Usage
The current estimated demand for local coal is
about 240,000 tonnes per annum.
Major domestic customers include the copper
mines, the brewery companies, tobacco farmers,
and manufacturers.
Prevailing factors in the coal energy sector in
Zambia
Zambia?s current proven coal deposits are located
in the Southern Province and estimated to contain
around 80 million tonnes of coal.
Zambia currently has two coal mines: the major
one being the former state-owned Maamba
Collieries Limited and the other being Collum
Coal Mine, both in the Southern Province.
Other probable coal reserves are in Luangwa
North, Luano, Lukusashi in the Luangwa Valley,
and Kahare, Chunga and Lubaba in the Western
Province, estimated to carry a total of around 700
million tonnes.
The current export market is estimated at 15,000
tonnes per month to Tanzania, Democratic
Republic of Congo (DRC) and Malawi.
With the regional power deficit, coal could become
a major source of power generation, especially
with improved and more efficient generation
technology.
Biofuels
The biofuels industry has inclined to a two-
pronged production system characterised by
feedstock production and promotion on the one
hand, and biofuel production models on the
other.
Currently limited quantities of bio-ethanol are
being produced from molasses, but not in
sufficient quantities to allow for blending with
petrol. There is a strong drive towards promotion
of jatropha, a widely grown species of euphorbia,
as the main feed stock for biodiesel in Zambia.
However, due to the infancy of the biofuels
industry in the country, productivity and crop
husbandry techniques are still largely in the initial
stages.
Forms of biofuel products used in Zambia
Bio-diesel, bio-ethanol, jatropha.
Usage
The Zambia Ministry of Energy and Water
Development (MEWD) estimates that about 84
million litres of bio-diesel and about 40 million
litres of bio-ethanol are required by the country
per annum.
Prevailing factors in the biofuel energy sector in
Zambia
Zambia has a capacity to produce biofuels.
However, given the limited quantities produced
and relative novelty of the industry, blending with
petrol and crop husbandry is not possible yet.
Jatropha, with about 6,000 hectares of land under
production, is the most common biofuel in the
country. A number of companies are now
producing electricity from bagasse, which is a by-
product of sugar production.
Projections show that only 11% of Zambia?s
arable land (about 46,000 square km) would be
required to satisfy the country?s diesel
consumption of 360 million litres per annum with
bio-diesel.
In order to enhance the biofuels sub-sector, the
Zambian Government is in the process of making
it a priority sector so that investors can benefit
from ZDA incentives such as tax waivers on
capital equipment.
Renewable energy
The Government of Zambia is investing in
renewable energy through a project aimed at
promoting the transfer of renewable energy
technology in order to achieve the objective of
sustainable energy for all. The Government has
recognised the need to promote renewable energy,
as clearly stated in the National Energy Policy of
2008.
Forms of renewable energy in Zambia
Solar energy, wind energy, geothermal energy and
mini/micro hydros.
Usage
(i) Solar energy
Zambia has an average of 2,000𔃁,000 hours
of sunshine per year, but solar power
(photovoltaic energy) penetration has remained
relatively low, due to high initial cost.
The solar power or photovoltaic (PV) market
remains dominated by Government, NGO and
donor-funded projects, with the World Bank (WB)
being the largest financing agency in the
sector.
Annual sales are in the range of US$ 2m to
US$ 3m, with 70% being donor-financed
projects.
The World Bank through its financing arm
International Finance Corporation (IFC) has
recently implemented the Scaling Solar
Programme in Zambia. This programme is meant
to offer financing insurance and advisory services
for the setting-up of two photovoltaic power
projects in Zambia.
This project was jointly advertised by the
Zambian Government through the Industrial
Development Corporation (IDC) and the IFC/World
Bank. Enel SA and Neoen SAS won contracts
to develop two photovoltaic power projects in
Zambia that will provide Africa?s cheapest solar
power, the first winners of a World Bank-
organised auction programme to promote wider
use of renewable energy in developing nations.
(ii) Wind energy
According to the ZDA report, wind energy in
Zambia is relatively low with wind data collected
at 10 metres per second (m/s) above the ground,
indicating speeds of between 0.1 to 3.5 m/s, with
an annual average of 2.5 m/s.
These wind speeds are not suitable for
electricity generation, but are for water pumping
for household use and irrigation purposes.
There are specific areas, such as in the
Western Province of Zambia, where wind regimes
are said to be as high as 6 m/s.
The Zambia Department of Energy has plans
to develop a ?wind atlas? to identify areas where
electricity could be generated.
(iii) Geothermal energy
Zambia has more than 80 hot springs, of
which 35 are rated high in terms of surface
temperature, flow rate, proximity to power lines,
as well as ease of access and relative energy
potential. These springs have not been tapped for
industrial or energy provision purposes, due to
high costs.
There currently is only one small geothermal
generation plant in Zambia, the Kapisya hot
springs, which was installed following an initiative
from the Italian Government in the mid-1980s,
and 2 x 120 KW turbines were installed in
1987.
Recent estimates indicate that the plant can
be upgraded to produce 2 MW of electricity.
Efforts are now being made by ZESCO to revive
the plant, but are pending the Government making
the 22 km access road an all-weather road so
that construction can start.
(iv) Mini/micro hydros
In terms of mini/micro-hydro power, Zambia
has a number of potential sites on smaller rivers
suitable for local small-scale power generation,
especially in the Northern and the North-Western
parts of the country because of their topography,
the geology of the ground, and the highest rainfall
in the country.
Prevailing factors in the renewable energy sector
in Zambia
USAID is working on a number of energy
initiatives in Zambia. First, it has been providing
technical assistance to the Ministry of Energy and
the regulator to develop a Renewable Energy
Feed-In Tariff (REFIT), complete with a
standardised Power Purchase Agreement. The
first and completed phase of the REFIT project
focused on policy development.
The policy is intended to guide and expand the
role of the private sector in developing the
country?s renewable energy resources, and
diversify the supply and nature of energy
production.
The second phase of the project focuses on
determining the cost to the offtaker for the
various renewable technologies. As with many
developing countries, the establishment of a REFIT
has spurred the on-boarding of new, small,
private sector-driven, renewable energy power
generation.
In April 2015, USAID sponsored delegates from
Zambia?s Rural Electrification Authority to travel
to Namibia to attend training on practical lessons
about developing, financing and implementing
grid-connected and off-grid projects. USAID also
funded a project that assists the Zambians in
addressing utility loss reduction and competitive
IPP procurement assessment.
In October 2015, the Swedish International
Development Cooperation Agency (Sida), a Power
Africa engaging donor partner, and USAID?s
Development Credit Authority (DCA), facilitated a
50% loan guarantee that will help Zambian
farmers finance and implement renewable energy
solutions.
Efforts to harness resources in renewable energy
have been minimal and this calls for the need to
harness this sector.
Investment in renewable energy will not only
promote the productive uses of energy but also
indirectly support other socio-economic and
environmental objectives, most notably poverty
reduction through employment generation, and
supporting action on climate change mitigation
and adaptation.
Generally, investment in the energy sector has
been the desire of many stakeholders including
the ZDA, civil society and consumers.
According to CUTS Lusaka International, a centre
for policy research, advocacy and networking on
issues of trade and development, the energy
sector in Zambia currently has one electricity
supply company, ZESCO Limited, dominating the
industry, with two other firms that operate on a
much smaller scale.
?The dominant industry player ZESCO Limited has
been facing a number of challenges over the past
years and the need for more investment to come
into the sector is being appreciated at policy
level. Various stakeholders have called for the
diversification of the country?s power generation
mix, especially now at a time when the country is
experiencing a huge power deficit,? said Chenai
Mukumba, CUTS Lusaka Co-ordinator at a recent
public meeting in Lusaka on Zambia?s energy
crisis.

The current electricity deficit has had a major
impact on future direction/policy in Zambia. The
most visible changes in direction and policy are:
increased investment in the development of new
hydro power plants focus on the development of
thermal power plants investment into solar
energy plants establishment of mini hydro plants
bio fuels and petroleum and gas exploration.

The Zambian Government has developed a
National Energy Policy to guide the administration
of the energy sector, because of the critical role
that energy plays in socio-economic development
and poverty reduction, and the need to enhance
that role. One of the key strategies outlined in the
policy was to provide leadership in the energy
sector through licensing and other regulatory
instruments.
In this regard, legislation to do with electricity
(The Electricity Act) was reviewed to open up the
sector, and new legislation (The Energy
Regulation Act) was introduced to provide for the
establishment of a regulator in the energy sector.
For the purposes of bringing electrical power to
rural and remote areas, The Rural Electrification
Act was introduced to deal with rural
electrification. To enhance the prevention and
control of pollution and environmental
degradation, The Environmental Management Act
was introduced to ensure environmental
management, the protection and conservation of
the environment, and the sustainable management
and use of natural resources.
Thorough processes were undertaken including
consultations and reference to international best
practice during the review of existing legislation
before the introduction of new legislation.

Posted By Chabala Chisenga,Article By Global Legal Insights.