Zambia A New Frontier in Mining and Energy Southern Africa Zambia Chamber of Commerce and Industry (SAZACCI) in collaboration with Africa Exchange on 25 July hosted a successful Business Symposium on Zambia’s energy and mining sector addressing the opportunities for investors. The Business symposium attracted an audience of more than 150 potential investor. It was held at Wannook Auditorium at KPMG Head office in Johannesburg South Africa. Among the key speakers were the captain of industry from the Ministry of mining energy and water development Mr Derick D Chilumbu. Chief Mining Engineer, Rural Electrification Mrs Naomi Sidono Community Mobilization officer, Zambia former Vice President Mr Enock Kavindele, Mr Jason Kazilimani Jr, Senior Partner (KPMG-Zambia), Mr Silvester Hibajene Director - Strategy and Regulation from Copperbelt Energy (CEC) and Michael Phiri from (KPMG) Zambia. Other Key note speakers included Mr Morne Rossouw (FNB) SA, Mr Adrian Buddingh MD for Pnenumax,Stephene Kevan from NintyEast Financial, Eugene Van Aswegen Marketing manager from IDWALA, and Vic Van Vuuren Director of ILO Pretoria. The Symposium was facilitated by Viloshnee Singh Business Development Director from Setpoint Pty. Mr Derick Chilumbu from the ministry of mines energy and water development Zambia, highlighted that, “Mining has been the major driver for Zambia’s economy and continues to be the prime move, hence the need for the government to formulate the investment strategy for mining sectors”. Which aims at creating; 1. An enabling Mining Policy, 2. A mining legal Framework, 3. A mining Fiscal Regimes, 4. A Petroleum and Exploration of Production. He further addressed that the objective of government is to implement a mining Law that will strike a balance between the needs of the country and that of investors investing mining. He emphasised that, the intent of the mining Act was not to over regulate the mining industry but to be in line with the global perspective and international best practices including the reporting standard and ensure that there is transparency within the mining industry. Mr Chilumbu further highlighted the mining rights that may be granted under the mining Act, namely; 1. A Prospecting Licence, 2. A large scale mining licence, 3. A large scale Gemstone licence, 4. A prospecting permit, 5. A Small scale mining licence, 6. An Artisans Mining Right etc. He also addressed the current mining Act of 2008 that it is currently under review by both the government, mining houses and exploration companies to address the concerns raised by stakeholders. He said that, “the government has in recent past granted oil and Gas exploration blocks to private companies as well as the establishment of the Petroleum trust fund”. Mr Silvester Hibajene Director -Strategy and Regulation from Copperbelt Energy Corporation (CEC). Started by addressing that “Energy is to the economy what blood is to the human body”. He further highlighted that Zambia has a power generation deficit, which includes SADC. He highlighted the SADC vision for 2027 in energy and the SADAC budget estimated at $173 billion for power generating projects over the next 15 years. He categorised the financial investment injection in three phases. 1. Short term financial injection of $62 billion budgeted for 2012 -2017. 2. Medium term financial injection of 39 billion from 2017 -2022. 3. Long term financial injection of $72 billion from 2022 -2017. Mr Hibajene addressed Zambia’s power demand is rising rapidly due to economic growth averaging 6.5% per annum, as well as the increase in the mining activities. He projected an increase of 7.1% by 2013. He said that “over the next 5 years, Zambia needs to double its generation capacity”. Mr Habajene highlighted that new capacity of 1,870 MW is needed at a cost of at least US$4.0 billion. This means about 300 MW of generation must be brought on stream each year going forward. Mr Habajene projected that by 2030, Zambia will need an additional 4,330 MW at a cost of US$12.0 billion, and said that most of the power will be from hydro. National hydropower endowment of 6,000 MW of which only about 30% has been exploited. He further emphasised that government alone cannot address the power shortage to bridge the power gap hence the need and role of the Private Sector participation. He further addressed that there is strong Policy and Regulatory support for power investments. A specialised unit for interfacing with investors in the sector - OPPPI As well as long term implementation agreements on BOO or BOT are given to IPPs. This implementation agreements recognise risks peculiar to power projects and government is willing to share risks with investors in Geological Risk e.g for costs above a certain thresh hold for original estimate, Government will pay extra cost up to a certain ceiling. This is negotiated with Government. Mr Habajene said that, “the Energy Regulation Board (ERB) gives Investment endorsement for power sector investments prior to project implementation”. This assures investors of an operating licence once power plant is built. It also includes an approved tariff which is essential to ensuring that the investment earns a reasonable return. A Public Private Partnership (PPP) Unit desk has been setup in the Ministry of Finance which enhances the institutional framework for infrastructure projects also PPAs may be signed with the national utility (Zesco) or large consumers like mines. He also pointed out that a number of private companies are now active in the power sector in Zambia through various PPP lead projects are at various stages of development which included: 1.Lunsemfwa Hydro Power Company (LHPC)105 MW, 2. Lunzua Power Authority (Kalungwishi project) 247 MW, 3. Copperbelt Energy Corporation (CEC) 40 MW, 4.Itezhi tezhi -120 MW, 5. Sioma Falls 60-80 MW, 6. Kariba North Bank Extension -360 MW, 7. Kafue Gorge Lower - 750 MW, 8. Maamba -300 MW, 9. EMCO -300 MW, 10. Ndola (HFO)-50 MW. Mrs Naomi Sidono community mobilisation officer from Rural Electrification Authority (REA-Zambia), addressed the opportunities and potential for public private partnerships (PPP) in developing mini hydropower plants. She said, Zambia has the potential to generate 6 000 MW in relation to the 1850 MW been generated at present. Considering that Zambia holders about 40% of southern Africa’s water resources, it simply shows Zambia’s potential in hydro Energy. Mrs Sidono said REA has identified 29 potential mini hydro projects and feasibility studies have already been conducted. In order to encourage PPPs among the energy sector, REA has offered up to 100% capital support to private companies developing energy generation capacity within Zambia. She feather said that only 3.1% of Zambia’s rural population has access to electricity however the government is trying to change these trends and ensure that the rural population have access to electricity and improve their livelihood through stainable development. The objective of REA is to increase the current rate to 51% by 2030, as set out in their Rural Electrification Master Plan (REMP) and it is estimated that $11 billion is needed to achieve the stated objective .Mrs Sidomo said. Mr Jason Kazilimani from KPMG Zambia senior partner addressed and enforced the investment incentives offered by Zambia Development Agency (ZDA) and citing Zambia’s political stability and solid economic growth of 7.5% increase in GDP. He further confirmed that according to the IMF Zambia’s GDP has reached $23.1-billion in 2013, he also confirmed that Zambia is among the top-ten fastest growing economies globally. Mr Kazilimani also highlighted the investment incentives that the Zambian government has put in place under the Zambia Development Agency Act. Namely: Duty free importation of all capital equipment. Tax holidays are offered: Years 1 – 5 of profitability 0% tax Years 6 – 10 of profitability 17.5% tax Years 11 and above Full tax (35%) He further said these incentives are available to both local and foreign investors Mr Michael Phiri form KPMG Zambia highlighted the peaceful political trends Zambia has experience in the past 50 years with five different Presidents and three different political party’s. Mr Phiri further highlighted that Zambia has more than 30 million MT of known coal reserves in the southern part of Zambia, hence the need to invest in coal for power generation. In conclusion Mr Evance Chanda, the Executive Director for Southern Africa Zambian Chamber of Commerce and industry (SAZACCI) applauded and thanked all the speakers and delegates that attended the Zambian Business Symposium. Mr Chanda particularly thanked the former Vice president Mr Kavindele for speaking at the forum and sharing a unique business message for those who are willing to do business in Zambia. Mr Chands also announced the highly anticipated planned trade mission to Zambia and encouraged the delegates to take advantage of the trade mission and see the investment opportunities in the Copperbelt Zambia. The anticipated trade mission is scheduled for 23- 26 September 2013. Mr Chanda concluded by address the delegates that our role as business people is to lead and implement government bilateral agreements. If we, the business community cannot lead then the government will lead and we will complain!
Posted on: Sun, 28 Jul 2013 17:04:07 +0000