SOUTHERN AFRICAN POWER POOL Regional and SubRegional Issues

SOUTHERN AFRICAN POWER POOL Regional and Sub-Regional Issues PPP Power Projects in Southern Africa Addis Ababa, ETHIOPIA 30 June – 1 July 2011 1 SOUTHERN AFRICAN POWER POOL

KEY ISSUES 1. Introduction to the SAPP 2. Installed Capacity & Generation Mix 3. Challenges to Cross-Border PPP Projects in the Power Sector 4. Measures and Mechanisms to Address the Challenges 5. 2 Role of the Power Pool SOUTHERN AFRICAN POWER POOL

Geographic q 1. 1 INTRODUCTION TO THE SAPP rag Ave th rat frica s A w a gro th w outh or S grow d for ü F and 7 an dem in 200 4. 6%. n 4. 9% e regio l who es ntri ple Cou peo 12 ion q ty Mill rici t. a. lec 230 E q e %p e 3 1. DR Congo Angola Tanzania Malawi Zambia Namibia Zimbabwe Botswana Mozambique Swaziland South Africa Lesotho 3 SOUTHERN AFRICAN POWER POOL

1. 2 Membership CEC and LHPC from Zambia are the new Members of SAPP 4 SOUTHERN AFRICAN POWER POOL

2. INSTALLED CAPACITY & GENERATION MIX 2. 1 5 Installed Capacity SOUTHERN AFRICAN POWER POOL

2. 2 Generation Mix & Contributions – Year 2011 74. 3% Coal 20. 1% Hydro 6 4. 0% Nuclear 1. 6% Gas/Diesel SOUTHERN AFRICAN POWER POOL

3. CHALLENGES TO CROSS-BORDER PPP PROJECTS i. Lack of enabling environment for PPP ii. ü Government policies yet to be harmonized ü Legal & regulatory frameworks inconsistent ü Incomplete power sector reforms ü National Utilities still enjoy monopoly PPP concepts not yet understood ü Policies on PPPs not yet developed in most countries 7 SOUTHERN AFRICAN POWER POOL

3. CHALLENGES TO CROSS-BORDER PPP PROJECTS iii. Low Electricity Tariffs – Inadequate and unsustainable levels with attendant challenges and NOT able to provide right signals for: ü New Investments from the Private Sector ü Energy conservation, efficiency & substitution practices by customers 8 SOUTHERN AFRICAN POWER POOL

Example of Cross-Border Transmission Projects DRC 2013: ZIZABONA -220/330 k. V Tanzania 2013: Mozambique Malawi 2014: Zambia - Tanzania - 400 k. V Malawi Angola Zambia 2015: DRC - Angola – 400 k. V Zimbabwe Namibia 2016: MOZAMBIQUE BACKBONE -RSA Mozambique Botswana 2017: Namibia – Angola Swaziland South Africa 9 Lesotho SOUTHERN AFRICAN POWER POOL

4. MEASURES & MECHANISMS TO ADDRESS THE CHALLENGES i. Policy choices to address challenges should be developed and need to recognize: Ø Need for financial viability – implement the policy of cost reflective/sustainable tariffs Ø Develop appropriate policy frameworks for PPPs ii. Complete power sector reforms in line with policy aspirations: Improve governance & operations iii. Tariffs: Regulators need to regulate towards cost reflectivity to allow existing utilities to recover operational costs and contribute to capital costs 10 SOUTHERN AFRICAN POWER POOL

5. ROLE OF THE POWER POOL i. Assist the region to harmonize PPPs policies on cross-border projects ii. Assist the region with the development of technical standards and the pool grid code iii. Develop transmission wheeling charges and wheeling model for all cross-border projects iv. Assist with the standardization of wheeling and power purchase agreements between parties v. Organize workshops on PPPs and concepts 11 SOUTHERN AFRICAN POWER POOL

THANK YOU 12 SOUTHERN AFRICAN POWER POOL