Energy crisis in Zambia

November 29, 2016

Zambia is a beautiful country with very friendly people.But it is a country that faces serious energy challenges.Recently elected Edgar Lungu’s led government has shown signs of goodwill to avert the predicted energy crisis by promising to create a better investment climate.Zambia is facing the potential of an energy crisis. Energy reserves and production have declined over the past few years, while energy consumption has steadily risen in line with economic growth. As a result, the gap between supply and demand is widening and putting mounting pressure on the economy.With the current rate of production, the energy demand will exceed supply by 2020. Industrial players and analysts have warned the government over the last few years that maintaining the current situation would in all certainty lead to a serious energy crisis. Without a breakthrough to increase reserves and production,Zambia will certainly face an energy crisis. Such a crisis will be felt from 2018, according to some estimates.What Zambia need is for all stakeholders to work together to find the right solutions to solve the current problems.The energy crisis had the potential to lead to an economic crisis. When that happens, then it will increase the subsidy, decrease state income and slow economic growth.According to experts, the energy crisis can only be avoided by increasing exploration activities to find new alternative sources of energy to meet the rising demand. That means the government needs to attract as much investment as possible in the energy sector. Investment is needed for exploration, production and for the development of infrastructure, especially infrastructure for renewable energy. During the last few years, investment in the energy sector has declined, as evident in stagnant development activities that have resulted in no new energy being built or developed.

€œTo generate exploration and production,Zambia will need a huge amount of investment for exploration and production. For that purpose, the government should simplify the regulations, streamline the bureaucratic procedures, provide incentives and business opportunities in Zambia.The absence of clearance, consistency and certainty of laws in Zambia has dampened the interest of investors to conduct energy development activities. Companies are required to obtain tens of licenses from different government institutions before they can start an energy project. The licenses are obtained from a number of ministries and other institutions under the central government and local governments where the projects are located.Of particularly concern is the land acquisition problems, which have stalled many projects, not only in the energy industry but in other industries as well.In addition to that, exploration is also hampered by legal inconsistencies, such as in the application of land and building taxes and recently applications for letters of credit and the obligation to use the Kwacha in dealings.Those things are in the mind of investors once they want to invest. Investors don’€™t mind about the law, but they need legal consistency and certainty in making their investment plans. If they see inconsistency might occur in the future, then they will be reluctant to invest.Big scale projects that require high technology and investment, are waiting for incentives and better deals with the Lusaka government.Some analysts and industrial players in Zambia see the current condition as a chance to push up renewable energy exploration activities, considering that energy investment is long term in nature. If the government of Zambia creates a conducive climate for investment and gives necessary incentives, especially for offshore projects, the government can still attract the necessary investment to the energy sector. On the positive side, the government has promised to create a better investment climate by integrating all licensing under the integrated one stop service like what Kenya has done in recent years. The government is also seeking to revise the energy with a view to strengthening its constitutional framework. œI support the Zambian government in simplifying the regulations and in revising the energy law.However, it is important for the revision of law to accommodate the solutions to the current problems facing the country’s energy sector. Me think all stakeholders need to work together to find solutions to avoid the energy crisis

Contador Harrison