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  ECONOMIC REGULATION - Investments in the Power Sector

Zambia has potential hydro power capacity of about 6,000 MW. However, the country has an installed generation capacity of only about 1,788 MW, which is just a third of its potential. Currently, the country is predominantly hydro and the majority of the power stations (1,640 MW) are state owned through ZESCO Ltd, which is involved in generation, transmission, distribution and supply of electricity.

Demand for power in Zambia has been growing steadily over the past few years and currently stands at around 1,300 MW. Generation capacity, on the other hand, has remained fairly stagnant over the past 30 years. Lunsemfwa Hydro Power Company situated in Kabwe is the only independent power producer in the country with an installed capacity of 38 MW. The balance of 110 MW is generated by private mining companies for backup purposes.

Only 25% of the Zambian population has access to electricity. In the rural areas, the level of access is less than 5%. Given the cardinal role electricity plays in socio-economic development, the ERB is working closely with all industry stakeholders to promote investment in power infrastructure.

It is currently estimated that Zambia will run out of capacity by the year 2008 when demand is expected to outstrip supply. At regional level, the problem is more acute as the SADC region is anticipated to run out of capacity by the year 2007.  Given the looming regional deficit, therefore, Zambia will need to be self sufficient in power. Zambia stands to benefit significantly from trade on the wider regional power market (exports of power), once the remaining two thirds of its unexploited power potential is utilised.

With only a third of Zambia's hydro potential developed, coupled with the low levels of access to electricity in the country and the fast growing demand, both locally and at regional level, Zambia faces a challenge, as well as an opportunity, to accelerate the pace of new investments in the power sector.

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