Rural electrification in Zambia: A policy and institutional analysis

Abstract

Zambia is well endowed with hydropower and other energy resources, which could facilitate production of electricity for both urban and rural areas of the country. The country has an installed electricity generation capacity of 1786 MW and undeveloped hydropower potential of over 6000 MW. In the last few years, demand has been growing and it is anticipated to outstrip supply in 2008. The load growth is attributed to increased mining activities and development of the industrial base. The country is also endowed with abundant natural resources such as arable land, water, minerals and wildlife. With the available resource base, electricity along with other social and economic infrastructure such as roads and telecommunications could facilitate increased economic activities. In rural areas, electricity could be used for crop irrigation, agro-processing, small-scale mining and to facilitate tourism. However, rural electrification (RE) faces many challenges such as long distances from existing power stations to targeted rural areas, low population densities, high poverty levels and low skills availability. These and other factors have contributed to continued low levels of access to electricity in rural areas of the country. Measures so far undertaken to facilitate access to electricity in rural areas of Zambia include the adoption of a new National Energy Policy (NEP) in 1994. With regard to the electricity sector and RE in particular, the NEP was aimed at facilitating increased access by liberalising and restructuring the electricity market and promoting the use of low-cost technologies and decentralised renewable energies. To facilitate implementation of the new policy, the government established a legal and institutional framework by enacting new legislation, namely, the Electricity Act and the Energy Regulation Act in 1995. The Electricity Act provided for liberalisation and regulation of the electricity sector, while the Energy Regulation Act provided for the establishment of an independent regulator so as to stimulate private sector participation and efficiency. In addition, a Rural Electrification Fund (REF) and associated administration mechanism was established in 1995. However, RE continued to experience many challenges. In 2003, the government enacted the Rural Electrification Act leading to the establishment of an agency dedicated to RE. This paper analyses the policy, legal and institutional measures implemented in Zambia and assesses their potential or effectiveness to tackle some of the challenges facing RE in the country so as to increase access and affordability.