9 th Germany Africa Energy Forum. Overview of the Copperbelt Energy Corporation (CEC) Business. Tuesday, 26 May 2015

Transcription

1 9 th Germany Africa Energy Forum Overview of the Copperbelt Energy Corporation (CEC) Business Tuesday, 26 May 2015

2 Republic of Zambia 2

3 Introduction 3 Historical Background: CEC was formed in 1997 from privatisation of Zambia Consolidated Copper Mines (ZCCM) Forerunners to CEC include: Power Division ZCCM (post 1982) Copperbelt Power Company (CPC) (post 1964) Congo Border Power Company (1950 s) 2014 Awarded concessionfor development of 128MW HFO Plant in Freetown Sierra Leone Signed PPA for 128MW with Sierra Leonean Government 2013 Acquired a stake in the Abuja Electrical Distribution Company through KANN Utility Acquired a stake in the Shiroro Hydro Power Station 2012 CEC begins early work construction for Kabompo Gorge project 2011 Joint venture agreement with Liquid Telecommunications Holding Limited to form CEC Liquid Telecommunications Limited Awarded infrastructure investment award 2010 Developer of the Year" presented by Africa Investor Signed a joint venture agreement with RTAA (Pty) Limited as well as acquired 50% interests in Realtime Technology Alliance Africa Ltd CEC was listed on the Lusaka Stock Exchange following the flotation of 25% of its shares to the public and employees % of the company was acquired by Zambian Energy Corporation 1997 ZCCM Power Division was privatized in 1997 and CEC was formed 1982 Became the power division of ZCCM, following the formation of ZCCM in Company was renamed the Copperbelt Power Company 1953 Founded in 1953 as the Rhodesia-Congo Border Power Company

4 Zambian Electricity Market 4 Generation LHPC NE CEC: transmits and supplies electricity to the mining industry Transmission Distribution CEC ZESCO ZESCO: a vertically integrated company which provides over 90% of the electricity generated in the country Supply Export market Lunsemfwa Hydro Power Company (LHPC): produces about 50MW Domestic market Mines Other consumers Ndola Energy (NE): Operates a 50MW HFO Plant ZESCO and a number of IPPs are developing generation projects

5 Business Activities & Asset Base 5 Business Activities: Utility with current operations on the Copperbelt Province of Zambia Supply of power to mines [includes emergency / back-up power] Domestic Wheeling: Power Transmission for ZESCO International Wheeling: transport of power on behalf of SNEL (DRC), other SAPP Utilities and some mines in DRC Power Trading: purchasing/selling of power within SAPP Infrastructure Over 1000km of high voltage transmission lines 80 MW Gas Turbine Generation Capacity (including 8.8m litre fuel storage facilities) 41 major high voltage substations 540km of optic fibre on power lines

6 6 Shareholding CEC Plc Zambian Investors & Standard Chartered PE Employee Share Scheme Listed Shares LuSE ZCCM I-H (Govt.) 28% 4,000 Shareholders Zambian Energy Corporation 20% 52% Copperbelt Energy Corporation CEC was listed on the Lusaka Stock Exchange in Jan 08.

7 7 CEC Group Structure ZCCM Investments Holdings Ltd ZAM Lusaka Stock Exchange Listed Shares Zambian Energy Corp Ltd IRE 20% 28% 52% Legend Ireland Mauritius Namibia Nigeria Zambia IRE MAU NAM NG ZAM CEC Liquid Copperbelt Energy Corp PLC 50% ZAM ZAM RTAA 50% ZAM 60% 40% CEC Kabompo Hydro Power Limited 100% CEC Lenux 100% MAU 20% MAU CEC Africa Investments Limited 75% KANN Utility 60% NG 61% MAU Nishati Investments Limited 98.5% CECA SL North South Power NG Abuja Electricity Distribution Company Limited NG ArandisPower of Namibia NAM CEC shareholder structure CEC telecom interest CEC vehicle set up for African expansion

8 8 Role of CEC (1) CEC network on Copperbelt accounts for: 40-45% of national peak demand 50% of energy consumption [high load factor mining customers] Emphasis on quality of supply necessary to incentivisemining investment: N-1 transmission design Power quality / power factor monitoring Emergency / back-up power arrangements in place for grid failure Extensive network and multiple supply points attractive for construction of new mining operations in future Employees: about 389 professionals largely in the engineering fields

9 9 Role of CEC (2) CECownstheZambianpartoftheDRC ZambiaInterconnector: Current 220kV line operated since 1956(350MW non-firm) New dual circuit 220kV line being installed to provide 550MW firm transfer capacity CEC was the first private sector utility to be a member of SAPP, key relationships include: ZESCO CEC keen to explore PPP model to work on potential generation and joint transmission development projects SNEL joint operation of interconnector, international power trading& provision of emergency support during grid interruptions Eskom international power trading and potential interest to purchasing hydro capacity in future NamPower partnership in development of generation and transmission projects Potential role in Zizabona project

10 Contractual Arrangements 10 Current business contracts include: Bulk supply agreement (BSA) with ZESCO: current source of all power supplied to mines Power supply agreements (PSAs): Supply of power to mines Domestic Wheeling (under BSA) : Power Transmission for ZESCO International wheeling: wheeling contract with Frontier mine in DRC and wheeling subject to SAPP rules for SAPP utilities International Power Trading: over the last 3 years CEC has been developing a new market with the mining customers in the DRC. Currently 40MW sourced from Eskom (from HCB) is sold to DRC Mines through SNEL. This is poised to increase to between MW.

11 Contractual Arrangements 11 (a) BSA with ZESCO Current term to 2020 Original Supply Limit of up to 700MW stepping down to 549MW and 329MW in 2012 and 2015 respectively Stringent quality of service/technical standards Agreement for CEC to supply only ZESCO power to Copperbelt mineco sites Originally guaranteed long term tariff stability with only USPPI adjustment this is changing with need to move to cost reflectivity Tariffs reviewed in 2008 (35%) and in 2011 (28%) (b) PSAs with Mine Customers Some PSAs have had their terms extended beyond 2030 PSAs provide for appropriate Supply Limits Stringent quality of service/technical standards Originally guaranteed long term tariff stability with only USPPI adjustment like BSA, this is changing with need to move to cost reflectivity Tariffs reviewed in 2008 (35%) and in 2011 (28%) New thinking to device more robust tariff setting/review mechanism

12 15 CEC Plc s Operations Power Trading Power Sales to the Mines Domestic Wheeling International Wheeling CEC s largest business area Involves power sales to the copper mines on the Copperbelt Underpinned by the Bulk Supply Agreements ( BSA ) under which CEC sources, from ZESCO, the power it sells to the mines Power sales to the mines are done under Power Supply Agreements ( PSA ) signed with each mine Involves the use of CEC stransmission infrastructure to transport power on behalf of ZESCO Power is transported from the bulk supply points on the Copperbelt to the numerous downstream substations at which ZESCO receives the power for onward supply to its, mostly, non-mine customers on the Copperbelt This service is provided in line with provisions of the BSA Involves the transmission of power through CEC s 220kV power assets linking Zambia to the DRC, and through ZESCO to the rest of the SAPP market Interconnection allows CEC to get involved in wheeling or transmission power traded within the SAPP Power volumes wheeled by CEC under international wheeling remain highly suppressed due to the lack of tradable power amongst SAPP countries The mine customers consumed a total of 3,744 GWh during 2011 This represents an overall energy sales increase on a year-on-year basis of about 3%, compared to 3,640 GWh consumed in 2010 Similarly capacity sales to the mines in both average and peak terms, increased by about 2.5%, from 470MW and 481MW in 2010 to 486MW and 498MW in 2011 respectively Wheeled energy volumes were about 1,578 GWh, compared to 1,660 GWh in 2010 Some level of growth driven by associated growth of the mining sector is expected in the coming years The number of planned and on-going housing projects and those involving construction of commercial centres further indicates likely growth in this business area A total of 124 GWh of energy was wheeled in 2011, compared to 108 GWh In 2010, representing an increase of 15% In normal times, substantial amounts of power flow from the DRC through the CEC and ZESCO systems to countries south of Zambia 12

13 Customers/Organic Growth 13 (a) Supply Contracts -Mines PSA Demand (MW) Konkola Copper Mines 230 Expected Growth (MW) Mopani Copper Mines ( ) CNMC Luanshya Copper 45 Mines Non-Ferrous Copper Mines ( ) (b) Wheeling Customers PSA Demand (MW) ZESCO 255 Frontier Mines 27 SAPP Chambishi Metals 20 Lubambe Zambia Ltd ( ) Chibuluma Mines 3 China Copper Mine 1 4 (2014)

14 Organic growth 14

15 15 CEC Power Investments - Zambia Generation: Kabompo Gorge Hydro Scheme 40MW (under development) Luapula Hydro Schemes up to 800MW (Feasibility Studies) Transmission: Copperbelt Luapula Trans-Pedicle Line (PPP model) to support evacuation of power from Luapula Renewables: Copperbelt Bio-mass Project (Feasibility) Bio-Diesel Refinery (Operatoinal - Commissioned 2011) Copperbelt 15MW Solar Project (Feasibility Studies) Kabompo 20 40MW Solar Project (Pre-feasibility)

16 Project Location (Area) [excluding transmission line] SENIOR CHIEF SAILUNGA S AREA SENIOR CHIEF MUSELE S AREA CHINUMA PROTECTED FOREST RESERVE AREA No.88 CEC Power Investments Kabompo BUSHINGWE PROTECTED FOREST RESERVE AREA No.103 SENIOR CHIEF SAILUNGA S AREA Project Area: Chief Sailunga (40%) 4,750Ha Chief Musele (23%) 2,720Ha Chinuma Forest 860Ha Bushingwe Forest 2,964Ha NHC site 420Ha Total land: 11,714Ha NATIONAL HERITAGE SITE (KABOMPO GORGE)

17 CEC Power Investments Luapula 17 River Schemes Site I 124 Site II 200 Mambilima Site V 150 Site M 80 Mombututa Site CX 301

18 18 CEC Telecommunication Investments CEC fibre networks spans over 770km presence in Lusaka, Copperbelt, Lumwana, Kabwe, Livingstone, Solwezi Focus so far on investment in metropolitan areas Realtime JV in 2009 to provide retail telecoms services JV Agreement with Liquid Telecom in February 2011 for fibre investment

19 19 CEC Africa has approved four projects to date: CEC Africa Investments KANN Utility - AEDC Shiroro Hydro Plant Acquisition of a 75% interest in KANN Utility Company Limited, which has acquired a 60% interest in Abuja Electricity Distribution Company ( AEDC ) through a process of international competitive tender. AEDC supplies power in Kogi, Abuja, Niger and Nasarawa States (the first letters of which the name KANN is derived from) in which more than 10 million people live. The electrification rate is around 27%, and AEDC has around 600,000 customers Acquisitionofa20%interestinNorthSouthPower,whichhasalongtermconcessiontooperatethe600MW Shiroro Hydro Plant in Niger State. This project was also secured through international competitive tender administered by the Bureau of Public Enterprises, as was the case with AEDC. The plant is largely in good working order, and currently provides around 20% of the grid connected power capacity available in Nigeria. The plant has a long term Power Purchase Agreement with the Nigerian Bulk Electricity Trader, which is a Nigerian Government owned company that procures power on behalf of the distribution companies including AEDC. CEC Africa is providing operational services to the project A 300MW Solar PV plant at feasibility stage(prefeasibility done) Arandis Power An acquisition of a 55% interest in Nishati Investments Limited, which owns Arandis Power, the developer of a 120MW HFO Generation plant in Arandis, Namibia. The issuance of shares is based on CEC Africa providing funding for a bankable feasibility study/ project development in accordance with agreed project milestones Sierra Leone grid development and generation A Joint Development Agreement with TCQ, a company registered in Lebanon to acquire a controlling interest in a grid development and generation concession in Sierra Leone. The grid will be developed through a Public-Private-Partnership structure with the Government of Sierra Leone, whereas the generation plant will be developed as an Independent Power Producer selling to the Government owned National Power Authority with appropriate credit and political risk support arrangements

20 Thank you for your attention 20 20