Energy Management

The Global Recession is something that Zambia could not avoid. Low copper prices were yet another issue that Zambia had no control over in the last two years.

Can we say the same for energy? What explanations do we have for the continuous electricity crisis in the country? What excuses can we give for the fuel crisis that crop up every other month?

Over the last few years we have made management and board of director’s changes in the Zambia Electricity Supply Corporation (ZESCO). In the last ten years the private investment component in the Indeni Oil Refinery moved from the Italians of Agip to the French of Total and now there is talk of a third new investor picking up where the French want to pull out.

When Total first expressed interest in buying the Agip shares, they performed their due diligence like any other professional multinational before taking the plunge. It was clear that million of dollars would need to be pumped into the company to upgrade the plant and possibly expand the processing and production capacity in order to operate efficiently and profitably.

Zambia and Zambians later smelled a rat when Total, through their Middle East and Africa Vice President, started complaining through the media about the huge amounts of investment that was needed in order for Indeni to be put right. At the same time the media reported that Total was lobbying for a national contract to import processed fuels in an effort to build Zambia’s strategic fuel reserves which would be a backup fuel supply during times when Indeni would be in shut down mode for maintenance, or when there were problems with feed stock supply to the refinery.

To many Zambians the writing was on the wall. Total was seen to be an investor in the fuel sector that wanted to renege on its commitment to continue to run Indeni, and was not keen to pump in capital to improve its performance and productivity. The ranting in the media about huge costs was considered a ploy to back out of the deal with Government. Furthermore, the effort to supply finished fuel products to Zambia was noted to be another maneuver to relegate Zambia back to the pre Indeni days of importing fuels rather than feed stock. Zambians felt that Total was doing what other investors in other parastatal companies had done in the past. Buy, operate for a while, import from home country, demobilize, and shut down. This perception has been reinforced by Total’s silence in responding to calls by the public who want to know why Zambia is not importing crude oil from Angola for processing at an upgraded Indeni in Zambia.

What ever the business pressures and motives of the investor in Indeni are, we cannot say that we were unaware of the difficulties. The same applies to the Zambia Electricity Supply Corporation (ZESCO). Our neighbours in Zimbabwe, South Africa, and Botswana have navigated through the same energy crisis that Zambia is in. Today they are more energy stable than we are. So we should be asking ‘what are we doing wrong’? Or maybe the question is ‘what are they doing right’?

What seems quite clear is that our neighbours did not try to wish the energy problems away. They planned, strategized, committed, implemented, and held key people accountable for successes or failures.

Systems of energy management were immediately implemented especially when energy was in short supply. This meant that the scarce energy was being utilized as efficiently as possible by the nation. Working links were established between the energy suppliers and the media in involving the public to use energy more efficiently and suffer the consequences of blackouts and shortages if they did not cooperate.

Short term upgrades and expansion programs were immediately launched to relieve the pressure and stress on the energy reserves and generation systems, with the full knowledge that more robust medium and long term strategies would have to kick in the near future.

A clear appreciation was acknowledged that energy was a socio-economic resource that was necessary for building the economy and therefore needed to be as cheap to industry as possible to support the low cost of production in the different sectors of economic activity. This acknowledgement challenged the energy sector which was predominately Government run, to assess the role of private sector investment which looks for a high rate of return on investment in a relatively short time. This was noted to be very difficult in a sector that is acutely monitored and regulated by a statutory body of Government.

Our neighbours had their State Presidents keep a sharp eye on their Energy Minister to ensure that the sector was serving the development demands of commerce and industry. Where the Minister was found wanting, then the President would either crack the whip or make strategic changes in an effort to keep the wheels of industry turning.

Due to these efforts, Zimbabwe has propelled its industry from ten percent production to fifty percent production within the last nine months. South Africa is stable in respect to fuel and electricity supply. Botswana is not experiencing power outages or fuel shortages even though the country is currently going through an economic crisis.

Where does that leave Zambia? The scenario on the ground is that the country swings from power outages to fuel shortages on a regular basis. The hardware shops are packed with generators and solar lighting products to offer Zambians alternative electricity sources. Generators naturally extend the pressure on fuel supply and just help to make things worse. In some areas residents are busy queuing up for fuel at the available petrol station while at home there is no electricity so the cooking is being done on charcoal fires. The argument for bio fuels has become hotter than ever in an effort to allow people to develop their own energy sources thereby slowly pushing Government out of the way.

The ZESCO management, the board, and the Energy Minister continue to operate as if electricity shortages are normal. There is no sense of urgency or pressure that the public can visibly see to be convinced that our colleagues are taking things seriously. Nobody seems to be worried about losing their jobs probably because they are confident that Zambia and Zambians will tolerate the ‘post war’ like supply of electricity. No concerns seem to be acknowledged that factories and industries will not grow or expand because they cannot rely on a continuous electricity supply. ZESCO has even gone to the extent of issuing public notices that they will not take any responsibility for compensation for equipment damaged due to power fluctuations and erratic supply.

In the fuel sector, we will continue to swap one investor for another because the Energy Ministry is not holding the investors accountable to their commitments when signing the share purchase agreements. The regular but unplanned shut downs at Indeni appear to be just one of those things that nobody should complain about. It does not seem to bother the Energy Ministry that Zambians are wasting precious time and money looking for fuel when they should be producing goods for export and to feed their families. There are levies in place to finance the holding of strategic fuel reserves in the many depot tanks across the country. Why are they all empty? Who is responsible? Are we going to have these shortages regularly because we cannot keep reserves to back up supply when they are problems at Indeni?

The climax of the energy crises in Zambia is epitomized by the recent intervention of the State President before he left for Uganda. Firstly he had to apologize to the nation for the fuel shortage on behalf of his Energy Ministry, secondly he had to take charge of the Energy Ministry and instruct the Government to take the necessary steps to redress the shortage, and thirdly he had to literally indicate that he had no confidence in the Energy Ministry and therefore had to go out of his way to intervene in the ongoing energy crisis. In short, the President had to step up and micro-manage the Energy Ministry.

Zambia is a country that makes very good pronouncements and articulates very interesting development rhetoric. The energy sector is the backbone for agricultural, industrial, and mining development in the country. The time has come to acknowledge that we cannot continue to blame the energy problems on the lower ranks. Changes have been made to managements; changes have been made to boards, now it is time to make the changes at the very top if we are to prosper in the coming years as we launch the COMESA Customs Union and roll out our much talked about Economic Zones.

Published 27 October 2009