Written by:
Chege Moses Kasaija
Load shedding impacted the Zambian economy negatively and forced the government to take decisive intervention through the introduction of the “open access” regime which saw the coming into the market of power traders to support ZESCO, this has allowed power traders to participate in the market openly and supply power to customers willing to buy the power through wheeling arrangements via ZESCO transmission and distribution infrastructure.
In this exclusive interview with African Power, Mining & Oil Review(APMOR), Mr. Andrew Kamanga, Managing Director Northwestern Energy Corporation expounds on why a well measured energy mix supported by adequate transmission capacity will remain critical to a sustainable electricity supply industry in Zambia.
Mr. Andrew Kamanga, Managing Director Northwestern Energy Corporation
APMOR: How would you describe the current state of Zambia’s electricity supply industry, especially after the introduction of the “open access” regime, and what is NWEC’s role in it.
Andrew: The market has opened up following the introduction of open access. Power traders such as Africa Greenco, EnPower, Reliance Power and Kanona Power have entered the market to cover the gap which ZESCO and other IPPs such as Maamba Energy, Kariba North Bank, Itezhi-Tezhi and Lumsemfwa Hydro are not able to meet the available demand for power.
APMOR: How does NWEC fit into Zambia’s participation in the Southern African Power Pool (SAPP), and What opportunities do you see for NWEC to contribute to cross‑border electricity trade within SADC.
Andrew: NWEC started out as a distribution company servicing thee three mine townships namely Kabitaka in Solwezi, Lumwana and Kalumbila. As part of its growth strategy as well as diversifying its risk, NWEC has embarked on new solar projects to supplement the supply of power from ZESCO, as well as the power traders during the recent period of load shedding. In this regard, NWEC plans to set up solar generation at the three sites initially starting with 10MW and scaling that to 60MW. With excess capacity, NWEC has applied to join the SAPP market to trade the excess power which will be generated from its solar plants. NWEC is also positioning itself to start power trading in the near future.
APMOR: How does NWEC differentiate itself from larger players like ZESCO and CEC in the eyes of customers and stakeholders, and how is NWEC positioning itself to remain competitive in a market that is shifting toward diversified generation and open access trading.
Andrew: As stated above, NWEC was the first private distribution company after ZESCO. To this end, NWEC’s model was to invest in the distribution infrastructure with 33Kv lines, 33/11Kv substations, 11Kv lines and 400v lines to provide the last mile connection to residential customers, as well as commercial and industrial customers.
For residential customers, NWEC charges the same regulated tariffs set by the Energy Regulation Board (ERB) which also apply to ZESCO residential customers. ERB has allowed NWEC to negotiate non-residential tariffs for its commercial and industrial customers.
CEC on the other hand focuses on high voltage transmission lines and service mining customers on the Copperbelt. The business model for CEC differs significantly with NWEC.
Transmission capacity is a recurring challenge.
APMOR: What specific investments or partnerships are needed to strengthen Zambia’s grid, and what opportunities exist for private investors in Zambia’s electricity sector, particularly in solar and coal projects.
Andrew: Following the recent load shedding where open access has been introduced with power traders coming into the market, there has been a marked improvement on the supply side especially with imported power. As a result, new negotiated tariffs have taken root in the market. The change in the tariffs has signalled a new era where tariffs are almost getting closer to cost reflective levels with some going as high as 18cents/kwh.
Further, new solar projects have come into the market with the 100Mw Chisamba and 60Mw CEC Itimpi plant, and Maamba is putting up an additional 300Mw phase two.
From the forgoing, it is clear that there is a lot of emphasis on new generation but very little is being done on increasing internal transmission capacity which may soon become a bottleneck. The need for new transmission infrastructure is necessary to support all the new generation coming on stream.
APMOR: As new solar and coal projects come online, how will NWEC market its role in supporting Zambia’s diversified energy mix, and what opportunities exist for NWEC to expand its brand beyond mining townships.
Andrew: As part of its growth and risk diversification strategy away from mining townships, NWEC is in the process of investing in a coal fired generation of 100MW, this project is at exploration stage in the southern part of Zambia where the coal resource is readily available. In addition, NWEC is exploring new transmission projects to support the additional evacuation and importation of power from the SAPP. On the distribution side, NWEC has identified new opportunities in Lusaka where a new 5,000 housing estate is earmarked as well as another new distribution opportunity in Chipata, Eastern province.
APMOR: What unique challenges does NWEC face in serving mining townships like Solwezi, Lumwana, and Kalumbila compared to other utilities, and how are you handling them.
Andrew: The biggest challenge is that NWEC unlike power traders, has invested in distribution networks as well as substations to service its customers. The return on such investments takes longer especially when the customer base is low. We hope that the mine townships will grow with new housing coming on stream. Kalumbila township is growing at an exponential rate and will become NWEC’s biggest operating area. Lumwana announced a new 5,000 housing estate and we will be happy to play a role there when called upon. Solwezi town is also growing, and we expect to increase our footprint outside the Kabitaka housing estate.
APMOR: What inspired you to enter the energy sector, and what keeps you motivated despite the challenges.
Andrew: The Zambian energy sector reforms started in 1994 and by 2000 with privatization of the mines completed, new mines such as Lumwana were opening and I was the consultant on power purchase agreements as well as taxation on the development agreement. As a result, I got to know more about mining and in the end set up NWEC as the first private electricity distribution company after ZESCO.
Investment in power projects is of a long term nature and requires a lot of patience and the investment required is recoverable over a long period. Tariffs equally play a part on investment decisions in power as well as the predictability of the regulations supporting the power industry.
APMOR: How do you ensure that NWEC is seen not just as a supplier of electricity, but as a partner in Zambia’s economic development and what role do you envision NWEC playing in the SADC energy landscape.
Andrew: As stated earlier, NWEC is looking to join SAPP and become a key player in the sector. With the new 60MW solar project and the 100MW thermal project, NWEC will change its outlook from supply of electricity to include generation and transmission. It is our expectation that NWEC will also venture into the regional projects to increase its foothold in SADC.
To support the planned expansion, NWEC plans to list on the Lusaka Stock Exchange (LUSE) later this year. It is our considered view that new projects will be better supported by bringing in new investors into the company to meet the growing expansion needs.
APMOR: What message would you give to regional investors about NWEC’s potential in the SADC market, and How can NWEC contribute to regional energy security and sustainability goals.
Andrew: With new generation from solar and thermal as well as participating in the SAPP market, NWEC will surely add to the energy security in the region.
APMOR: How do you see Zambia’s electricity industry evolving by 2035, and what role will NWEC play in that transformation.
Andrew: NWEC continues to be on the lookout for new generation, transmission and distribution and trading opportunities. We expect the Zambian electricity supply industry to grow by 2035 especially that the government has the ambition to produce 10,000MW by 2030 and increase copper production to 3 million tonnes by 2030. These are ambitious targets but also give the electricity industry to scale up. NWEC is positioning itself to be part of the growth targets for 2035. Having a well diversified energy mix as well as a predictable and sustainable economic tariffs will guarantee new generation as well as new transmission projects.
APMOR: As Managing Director, how do you navigate the tension between short‑term crisis management (like load shedding) and long‑term sustainability planning.
Andrew: This is part of the challenge to ensure that power is supplied to our customers bearing in mind that miners are always sensitive and would not listen to stories of load shedding. We therefore had to react to the market dynamics by buying expensive power from traders during the recent load shedding crisis.
Long term planning is part of my role as MD, hence focusing on new business development as well as managing the various risks associated with our operations.
APMOR: What is your vision for NWEC’s contribution to Zambia’s economic development over the next decade and if you could change one thing about Zambia’s energy policy today, what would it be.
Andrew: Our vision is to increase our footprint in Zambia and the region hence applying to join SAPP and participate in power trading following the open access regime which has come to play. NWEC will surely contribute to economic development of the country by embarking on new projects thereby creating more jobs for Zambians. An expanded NWEC will also support the government by paying more taxes and increasing electricity access to more Zambians.
APMOR: What message would you give to young engineers and entrepreneurs who want to contribute to Africa’s energy transition.
Andrew: The opportunities are readily available, and they need to participate and be part of the growth story. Electricity is the lifeblood of our economy and the reforms and transition will surely happen. The young professionals have to be part of the paradigm shift. At NWEC with the expected listing, we will be looking for talented young professionals who can be part of the growth of the company.
APMOR: If you had to summarize NWEC’s story in one sentence for an international investor, what would it be.
Andrew: NWEC is available for new investors to grow the company as we have a clear strategy for the next 10 years and the time to act is now.
APMOR: How would you describe the current state of Zambia’s electricity supply industry, especially after the introduction of the “open access” regime, and what is NWEC’s role in it.
Andrew: The market has opened up following the introduction of open access. Power traders such as Africa Greenco, EnPower, Reliance Power and Kanona Power have entered the market to cover the gap which ZESCO and other IPPs such as Maamba Energy, Kariba North Bank, Itezhi-Tezhi and Lumsemfwa Hydro are not able to meet the available demand for power.
APMOR: How does NWEC fit into Zambia’s participation in the Southern African Power Pool (SAPP), and What opportunities do you see for NWEC to contribute to cross‑border electricity trade within SADC.
Andrew: NWEC started out as a distribution company servicing thee three mine townships namely Kabitaka in Solwezi, Lumwana and Kalumbila. As part of its growth strategy as well as diversifying its risk, NWEC has embarked on new solar projects to supplement the supply of power from ZESCO, as well as the power traders during the recent period of load shedding. In this regard, NWEC plans to set up solar generation at the three sites initially starting with 10MW and scaling that to 60MW. With excess capacity, NWEC has applied to join the SAPP market to trade the excess power which will be generated from its solar plants. NWEC is also positioning itself to start power trading in the near future.
APMOR: How does NWEC differentiate itself from larger players like ZESCO and CEC in the eyes of customers and stakeholders, and how is NWEC positioning itself to remain competitive in a market that is shifting toward diversified generation and open access trading.
Andrew: As stated above, NWEC was the first private distribution company after ZESCO. To this end, NWEC’s model was to invest in the distribution infrastructure with 33Kv lines, 33/11Kv substations, 11Kv lines and 400v lines to provide the last mile connection to residential customers, as well as commercial and industrial customers.
For residential customers, NWEC charges the same regulated tariffs set by the Energy Regulation Board (ERB) which also apply to ZESCO residential customers. ERB has allowed NWEC to negotiate non-residential tariffs for its commercial and industrial customers.
CEC on the other hand focuses on high voltage transmission lines and service mining customers on the Copperbelt. The business model for CEC differs significantly with NWEC.
Transmission capacity is a recurring challenge.
APMOR: What specific investments or partnerships are needed to strengthen Zambia’s grid, and what opportunities exist for private investors in Zambia’s electricity sector, particularly in solar and coal projects.
Andrew: Following the recent load shedding where open access has been introduced with power traders coming into the market, there has been a marked improvement on the supply side especially with imported power. As a result, new negotiated tariffs have taken root in the market. The change in the tariffs has signalled a new era where tariffs are almost getting closer to cost reflective levels with some going as high as 18cents/kwh.
Further, new solar projects have come into the market with the 100Mw Chisamba and 60Mw CEC Itimpi plant, and Maamba is putting up an additional 300Mw phase two.
From the forgoing, it is clear that there is a lot of emphasis on new generation but very little is being done on increasing internal transmission capacity which may soon become a bottleneck. The need for new transmission infrastructure is necessary to support all the new generation coming on stream.
APMOR: As new solar and coal projects come online, how will NWEC market its role in supporting Zambia’s diversified energy mix, and what opportunities exist for NWEC to expand its brand beyond mining townships.
Andrew: As part of its growth and risk diversification strategy away from mining townships, NWEC is in the process of investing in a coal fired generation of 100MW, this project is at exploration stage in the southern part of Zambia where the coal resource is readily available. In addition, NWEC is exploring new transmission projects to support the additional evacuation and importation of power from the SAPP. On the distribution side, NWEC has identified new opportunities in Lusaka where a new 5,000 housing estate is earmarked as well as another new distribution opportunity in Chipata, Eastern province.
APMOR: What unique challenges does NWEC face in serving mining townships like Solwezi, Lumwana, and Kalumbila compared to other utilities, and how are you handling them.
Andrew: The biggest challenge is that NWEC unlike power traders, has invested in distribution networks as well as substations to service its customers. The return on such investments takes longer especially when the customer base is low. We hope that the mine townships will grow with new housing coming on stream. Kalumbila township is growing at an exponential rate and will become NWEC’s biggest operating area. Lumwana announced a new 5,000 housing estate and we will be happy to play a role there when called upon. Solwezi town is also growing, and we expect to increase our footprint outside the Kabitaka housing estate.
APMOR: What inspired you to enter the energy sector, and what keeps you motivated despite the challenges.
Andrew: The Zambian energy sector reforms started in 1994 and by 2000 with privatization of the mines completed, new mines such as Lumwana were opening and I was the consultant on power purchase agreements as well as taxation on the development agreement. As a result, I got to know more about mining and in the end set up NWEC as the first private electricity distribution company after ZESCO.
Investment in power projects is of a long term nature and requires a lot of patience and the investment required is recoverable over a long period. Tariffs equally play a part on investment decisions in power as well as the predictability of the regulations supporting the power industry.
APMOR: How do you ensure that NWEC is seen not just as a supplier of electricity, but as a partner in Zambia’s economic development and what role do you envision NWEC playing in the SADC energy landscape.
Andrew: As stated earlier, NWEC is looking to join SAPP and become a key player in the sector. With the new 60MW solar project and the 100MW thermal project, NWEC will change its outlook from supply of electricity to include generation and transmission. It is our expectation that NWEC will also venture into the regional projects to increase its foothold in SADC.
To support the planned expansion, NWEC plans to list on the Lusaka Stock Exchange (LUSE) later this year. It is our considered view that new projects will be better supported by bringing in new investors into the company to meet the growing expansion needs.
APMOR: What message would you give to regional investors about NWEC’s potential in the SADC market, and How can NWEC contribute to regional energy security and sustainability goals.
Andrew: With new generation from solar and thermal as well as participating in the SAPP market, NWEC will surely add to the energy security in the region.
APMOR: How do you see Zambia’s electricity industry evolving by 2035, and what role will NWEC play in that transformation.
Andrew: NWEC continues to be on the lookout for new generation, transmission and distribution and trading opportunities. We expect the Zambian electricity supply industry to grow by 2035 especially that the government has the ambition to produce 10,000MW by 2030 and increase copper production to 3 million tonnes by 2030. These are ambitious targets but also give the electricity industry to scale up. NWEC is positioning itself to be part of the growth targets for 2035. Having a well diversified energy mix as well as a predictable and sustainable economic tariffs will guarantee new generation as well as new transmission projects.
APMOR: As Managing Director, how do you navigate the tension between short‑term crisis management (like load shedding) and long‑term sustainability planning.
Andrew: This is part of the challenge to ensure that power is supplied to our customers bearing in mind that miners are always sensitive and would not listen to stories of load shedding. We therefore had to react to the market dynamics by buying expensive power from traders during the recent load shedding crisis.
Long term planning is part of my role as MD, hence focusing on new business development as well as managing the various risks associated with our operations.
APMOR: What is your vision for NWEC’s contribution to Zambia’s economic development over the next decade and if you could change one thing about Zambia’s energy policy today, what would it be.
Andrew: Our vision is to increase our footprint in Zambia and the region hence applying to join SAPP and participate in power trading following the open access regime which has come to play. NWEC will surely contribute to economic development of the country by embarking on new projects thereby creating more jobs for Zambians. An expanded NWEC will also support the government by paying more taxes and increasing electricity access to more Zambians.
APMOR: What message would you give to young engineers and entrepreneurs who want to contribute to Africa’s energy transition.
Andrew: The opportunities are readily available, and they need to participate and be part of the growth story. Electricity is the lifeblood of our economy and the reforms and transition will surely happen. The young professionals have to be part of the paradigm shift. At NWEC with the expected listing, we will be looking for talented young professionals who can be part of the growth of the company.
APMOR: If you had to summarize NWEC’s story in one sentence for an international investor, what would it be.
Andrew: NWEC is available for new investors to grow the company as we have a clear strategy for the next 10 years and the time to act is now.
