Subscriber Login

Features

Progress on SAPP: Actively looking to secure funds [free access]

May 11, 2018

The first formal power pool in Africa, Southern African Power Pool (SAPP) is striving to attract investment to expand electricity infrastructure and capacity in the Southern African Development Community (SADC) region. Its 12 members, namely, Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe, have formulated plans and proposals to enhance electricity trade and provide reliable and economical power to their people.

 

By the end of March 2017, SAPP had a total installed generation capacity of 59,539 MW and an operating capacity of 54,397 MW. During 2016-17, about 4,180 MW of capacity was added by both public utilities and independent power producers (IPPs) in the SADC region. It is estimated that the SAPP countries require a capacity of over 96,000 MW by 2027 to meet their electricity needs. To achieve this, about 30,646 MW is planned to be commissioned across the 12 countries between 2017 and 2022.

 

Table 1: Committed generation projects in the SADC region, 2017 to 2022

Country

2017

2018

2019

2020

2021

2022

2017−22

Angola

1,727

1,269

0

0

0

0

2,996

Botswana

120

0

0

300

0

0

420

DRC

150

0

0

360

0

1,500

2,010

Lesotho

0

20

0

0

0

0

20

Malawi

36

12

132

340

310

100

930

Mozambique

40

130

30

0

0

550

750

Namibia

60

0

37

0

800

0

897

Saudi Africa

1,128

3,037

4,035

2,028

3,044

1,516

14,788

Swaziland

0

0

12

0

0

0

12

Tanzania

120

305

1,260

565

50

675

2,975

Zambia

15

113

300

790

930

0

2,148

Zimbabwe

120

540

630

600

810

0

2,700

Total

3,516

5,426

6,436

4,983

5,944

4,341

30,646

Source: SAPP Annual Report, 2017

 

Apart from conventional fossil fuel-based projects, the SADC countries have also started investing in renewable energy plants, following a resolution made in 2012 by the southern African countries to increase the use of cleaner and alternative energy sources to reduce carbon emissions. In line with this, SADC has set a target to achieve a renewable energy share of at least 32 per cent in the total energy mix by 2020 and 35 per cent by 2030.

 

The planned expansion of the production facilities needs a strong transmission network to be able to carry the additional load. To this end, nine priority projects involving investments of over USD4 billion are under planning and development. These projects are expected to create new corridors to support industrial development and improve energy security in the region, without overloading the existing transmission network. SAPP has been holding dialogues with various agencies and development banks and has secured multilateral funding for various projects and activities, which include capacity building, technical assistance and project preparatory funding. Some of the recent efforts include the ongoing discussions with the Development Bank of Southern Africa (DBSA) for the Mozambique–Zimbabwe–South Africa (MoZiSa) transmission project. The African Development Bank (AfDB) has also assessed several SADC regional interconnection projects and is in the final stages of approving the same. SAPP has also secured funding from the International Development Association (IDA) for consultancy services to establish the SAPP transmission infrastructure development financing facility.

 

Following is a brief update on the nine high priority transmission projects.

 

Zambia–Tanzania–Kenya (ZTK) Interconnector

 

The project will connect SAPP countries with Eastern Africa Power Pool (EAPP) countries. It involves the construction of a 700-km-long, 400 kV double-circuit transmission line originating from Serenje in Zambia and ending at Mbeya in Tanzania; reinforcement of Tanzania’s transmission system through the construction of about 650 km of transmission lines; and construction of a 260-km-long, 400 kV transmission line between Arusha in Tanzania and Isinya (near Nairobi) in Kenya. Overall, the project will involve the construction of 2,302 km of 400 kV double-circuit lines and 373 km of 330 kV single-circuit lines at an estimated cost of USD 1.4 billion.

 

The two main lines being built in Tanzania under the second component are the 350-km-long, 400 kV Mbeya–Iringa line, and the 250-km-long, 400 kV Singida–Arusha line. Both lines are being implemented under the Nile Basin Initiative’s (NBI) Nile Equatorial Lakes Subsidiary Action Programme (NELSAP). Both lines are related to another project in Tanzania called the Iringa–Singida–Shinyanga power line project, also known as the Backbone Transmission Investment Project (BTIP). The Mbeya–Iringa line will connect with the BTIP at Iringa. The Singida–Arusha line will connect with the BTIP at Singida. The Zambia–Tanzania line is being funded by the Industrial and Commercial Bank of China Limited (ICBC) through a USD285 million loan. The Kenya–Tanzania section is being funded by AfDB and the Japan International Cooperation Agency (JICA).

 

Work on the 381-km-long, 330 kV Kasama–Pensulo line was completed in December 2015. As of March 2017, the feasibility study on the 100-km-long, 400 kV Mbeya–Tunduma (border with Zambia) line had been completed. Procurement of funds is in progress and an engineering, procurement and construction (EPC) contract has been awarded for the 243-km, 330 kV Nakonde–Kasama (Zambia border with Tanzania) line. In addition, construction has started on the 400 kV Mbeya–Kasama–Kabwe line. The entire ZTK is expected to be commissioned by December 2019.

 

Mozambique–Zimbabwe–South Africa (MoZiSa) Transmission Project

 

A new transmission interconnection to link three SADC countries—Mozambique, Zimbabwe and South Africa—has been divided into two components in order to de-risk it and to fast-track the development to facilitate the already available surplus generation capacity in South Africa. Component A of the project, which focuses on the development of an interconnector between Zimbabwe and South Africa (ZISA), involves the construction of a 275-km, 400 kV Triangle (Zimbabwe)–Nzhelele (South Africa) interconnector line. Component B will involve the development of infrastructure to interconnect Mozambique and Zimbabwe (MOZI) through the construction of the 85-km, 400 kV Orange Grove (Zimbabwe)–Inchope (Mozambique) interconnector line.

 

The project also entails the installation of a 400 kV line bay at the Nzhelele substation in South Africa and the construction of a 400/330 kV substation at Triangle, a 400/330 kV substation at Orange Grove in Zimbabwe and a 400/220 kV substation at Inchope. In addition to this, a 360-km, 400 kV Inchope–Matambo line and a 115-km, 400 kV Matambo–Songo line will be installed in Mozambique. The project is being implemented by Electricidade de Moçambique (EDM), Eskom of South Africa and the Zimbabwe Electricity Supply Authority (ZESA). SAPP has received grant funding from the Project Preparation Feasibility Study Fund (PPFS), jointly funded by DBSA and France’s Agence Française de Développement (AFD), for conducting a scoping study for the preparation of the project. In August 2015, DBSA allocated a grant worth USD3.5 million for project development.

 

In March 2017, Zimbabwe’s State Procurement Board (SPB) shortlisted China-based companies Tebian Electric Apparatus (TBEA) and China CAMC Engineering Company Limited (CAMCE) for the construction of the transmission line connecting the Orange Grove substation to the Triangle substation. Currently, the project is undergoing an environmental and social impact assessment (ESIA). Construction works on the project are expected to begin soon.

 

Mozambique Transmission Backbone Project (CESUL)

 

The project, being implemented by Mozambique’s EDM, aims  to link the country’s central northern grid and southern grid, which are currently operating as two isolated systems. The Central-Southern (CESUL) project entails the installation of two transmission lines to link the Tete region in central Mozambique to the capital city of Maputo in the southern part of the country. It will transport the electricity generated at the new hydropower plants, Mphanda Nkuwa (1,500 MW) and Cahora Bassa (North Bank, 1,245 MW), to the markets. The project will also link the country with SAPP.

 

The backbone transmission project aims to improve the reliability of affordable electricity in Mozambique’s urban centres along the route to Maputo, and in the southern African region as a whole.

The CESUL project has two main transmission lines—a 400 kV high voltage alternating current (HVAC) line and an 800 kV high voltage direct current (HVDC) bipolar link. The feasibility study for the project has been completed. The project is estimated to cost USD2.8 billion and is being developed on a public-private partnership (PPP) basis under a build-own-transfer (BOT) model. The stakeholders of the project are State Grid Corporation of China (SGCC) with a majority stake of 46 per cent, South Africa’s electricity company Eskom (25 per cent), EDM (15 per cent) and Portugal’s REN (14 per cent). The project work was scheduled to commence by 2017 and commercial operation is expected in 2021–22.

 

Central Transmission Corridor (CTC) (Zimbabwe)

 

The project involves the construction of three 400 kV lines aggregating 280 km for decongesting the ZESA system and removing constraints in Zimbabwe’s electricity network. The lines include the 40-km Marvel–Insukamini line, the 160-km Alaska–Sherwood line and the 80-km Bindura–Mutorashanga line. In addition, the project includes the installation of a 400 MVar static var compensator (SVC) at the Dema substation and an SVC at the Sherwood substation. The project is also important for the MoZiSa transmission project. The cost is estimated at USD100 million.

 

The project will help increase Zimbabwe’s electricity transfer capacity with its neighbours. Specifically, the north–south transfer capacity of the Zimbabwean network will increase from 200 MW to 600 MW. The project is important for the region as a whole as Zimbabwe’s network is often used for cross-border electricity trading. It will benefit the wheeling parties. As of March 2016, funding had been secured from DBSA, the Government of Norway and Swedish International Development Cooperation Agency (SIDA) for funding technical studies and the ESIA. Further funding is currently being sought.

 

Mozambique–Malawi Interconnector

 

The Mozambique–Malawi interconnector will involve the construction of a 210-km-long, 400 kV power transmission line connecting the Matambo substation in Tete (Mozambique) to the Phombeya substation in Balaka (Malawi). As of October 2016, the feasibility study and detailed design and preparation of tender documents for the project were underway and were expected to be finalised by May 2017. Work on the interconnector from the Phombeya substation is ongoing on the Malawi side with financing from the Millennium Challenge Corporation (MCC) and will be completed in early 2018.

 

The USD140 million project will be funded by a pool of financiers comprising the World Bank as the major financier and KfW Bank, Norwegian Trust Fund and European Investment Bank (EIB) as co-financiers. The project is expected to commence operations in 2020. Initially, the project was to be built at a lower voltage level of 220 kV, entailing the construction of a power line from Nacala in Mozambique to Phombeya in Malawi. While project construction was slated to commence in 2009 after securing World Bank funding of USD88 million in December 2008, the project was stalled due to Malawi’s disagreement over the power-sharing contract between the two neighbouring countries. Later in 2013, the project was revived by the governments of Malawi and Mozambique, and financing was secured in 2014 to develop the project at the 400 kV voltage level. In February 2018, SAPP appointed an independent advisor to assist ESCOM, Malawi on power purchase agreements and wheeling arrangements.

 

Zimbabwe–Zambia–Botswana–Namibia (ZIZABONA) Interconnector

 

The project will connect the power grids of Zimbabwe, Zambia, Botswana and Namibia. It is being implemented by ZESA, Zambia Electricity Supply Corporation (ZESCO), Namibia Power Corporation (NamPower) and Botswana Power Corporation (BPC). It entails the construction of about 408 km of lines, namely, the 101-km-long, 330 kV Hwange (Zimbabwe)–Livingstone (Victoria Falls in Zambia) line; the 231-km-long, 400 kV Livingstone (Zambia)–Zambezi (Namibia) line; and the 76-km-long, 330 kV Victoria Falls (Zimbabwe)–Pandamatenga (Botswana) line. The project also entails the extension of the Hwange substation; construction of a new 330 kV switching station near Victoria Falls town; construction of a 330 kV busbar with three line bays for lines to Livingstone, Pandamatenga and Hwange; construction of a new 330 kV substation by ZESCO (separate financing); construction of a new 330/220/132 kV substation at Pandamatenga; and extension of the Zambezi substation in Namibia. In 2015, Zambia awarded South Africa’s Babcock Ntuthuko Power Lines (Pty) Limited a USD24.1 million contract for the upgrade of the 220 kV Kafue Town–Muzuma–Livingstone–Victoria Falls transmission line. In April 2017, AfDB extended a USD35 million loan for project implementation.

 

In addition, the World Bank, EIB, AFD and Stanbic Bank Botswana are involved in funding the 330 kV project. The developers are considering developing the project in phases and are planning to link the first two countries—Zimbabwe and Zambia—before moving to the others. Further, the developers have hired a consultant to focus on the business case development and finalise the preparation of technical specifications and engineering, procurement and construction (EPC) tender documents. The project’s financial and economic assessments were completed in October 2017. As of December 2017, discussions were at an advanced stage for securing funding for construction of the Zimbabwe–Zambia portion. Additionally, SAPP Project Advisory Unit (PAU) is working with the sponsors to develop a funding solution for the Zambia–Namibia portion. An implementation agreement has been drafted in this regard and is being reviewed by the sponsors. The project work is expected to be completed by 2021.

 

Botswana–South Africa (BOSA) Interconnector

 

The project will involve the construction of an approximately 560-km-long, 400 kV transmission line connecting both the countries. It will be implemented by the BPC and Eskom Holdings SOC Limited (Eskom). In March 2016, Australia-based Aurecon was appointed as the transaction advisor for the project to carry out the detailed feasibility studies. The line route for the interconnector has been changed to take into account the location of the Watershed B substation in South Africa. The line route selection is almost complete. As of February 2018, project scoping work had been completed. Public comments on the ESIA and Resettlement Action Plan (RAP) are currently being incorporated by the consultants, while those received on the network planning studies have already been incorporated. The project has been delayed owing to the ESIA processes. In addition, works on the commercial structures and preliminary design are underway. The project is expected to be commissioned by 2022.

 

Botswana North West Transmission Project

 

BPC is executing the project, which involves the construction of a 400 kV line from Morupule to Maun via Orapa as well as 400 kV substations at Orapa and Maun. The project also involves the construction of a 220 kV line from Maun to Toteng; the 220 kV Toteng substation; the 132 kV Shakawe and Gumare substations; and a 132 kV line to link Shakawe, Gumare and Ghanzi. The objective of the project is to extend the grid to the Maun, Shakawe and Ghanzi areas to increase access and reliability. It is expected to cost around BWP4.8 billion. The project is also linked to the ZIZABONA project. As of March 2018, construction works officially started on the project in Samochima village located in the Okavango district.

 

Namibia–Angola Interconnector

 

The interconnector entails the construction of a power transmission line from the proposed Baynes hydropower plant in Lower Kunene, Namibia, to the national power grid of Angola. The project aims to evacuate power from the hydropower plant to Angola and SAPP. The state-owned electricity companies of Angola [Empresa Nacional de Electricidade (ENE)] and Namibia (NamPower) are executing the project. As of March 2016, the governments of Angola and Namibia were negotiating to sign the draft Inter-Governmental Memorandum of Understanding (IGMOU) followed by the signing of the draft Inter-Utility Memorandum of Understanding (IUMOU) between Rede Nacional de Transporte de Electricidade (RNT) (Angola) and NamPower (Namibia).  As of March 2016, preparatory funds had been secured to carry out the detailed feasibility studies and to achieve financial closure for project development. In February 2018, the pre-feasibility report covering the options and line route selection, market analysis, preliminary design, pre-feasibility financial analysis and cost estimates and potential commercial structures were approved by the stakeholders. Ahead of this, a detailed feasibility study will be carried out following approvals from the project sponsors. Further, project scoping works have also been completed.

 

Challenges and way forward

Regional cooperation under SAPP has been fairly successful in meeting the energy demand across various member countries. However, a lot needs to be done for the integration of Angola, Malawi and Tanzania with the regional power grid so that any new generation capacity installed in any of the three countries is also accessible to the nine other SAPP members.  The SADC region has been facing a shortage of funds, which has limited investment in the energy sector. However, the continuing discussions to procure multilateral funding for the various interconnector projects should help overcome this limitation. If the planned projects are implemented on time, the SADC region will be able to boost its industry and economy and create a balanced energy infrastructure for its member countries.