THE ENERGY REGULATOR Newsletter - erb.org.zm · The Energy Regulator Newsletter 3 ERB Approves Zengamina Tariffs The ERB approved the tariff for Zengamina Power Station Limited for

The Energy Regulator Newsletter1

N e w s l e t t e rAN ENERGY REGULATION BOARD NEWSLETTER SECOND EDITION 2008

THE ENERGY REGULATOR

Energy ExhibitionSida technical support to ERBZengamina Tariff

Bio fuels: effect on climate, land and food prices


EDITORIAL

DISCLAIMER

The articles and information contained in this publication may be used in other publications or reproduced on condition that the credit is given to the source. While precautions have been taken to ensure accuracy of advice and information given to readers, we cannot accept responsibility for any damages or inconvenience that may arise there-from. Any material sent to us, will be treated as unconditionally assigned for publication and will be subject to our unrestricted right to edit and comment. Some of the views expressed in this publication may not necessarily be those of the Board or its Management.

Contents

For further information, please contact:The Communication OfficerEnergy Regulation Board8th Floor, Premium House, Nasser RoadP.O. Box 37631Lusaka 10101

Tel: 260-1-236002Fax: 260-1-236003E-mail: [email protected] site: www.erb.org.zm

Dear Reader,

Welcome to the 24th Edition of the Energy Regulator!

This edition of The Energy Regulator highlights a number of initiatives that the ERB, utilities and the Zambian public put in place to cope with challenges in the energy sector.

The Energy Conservation Week was held in Zambia for the first time in June 2008. There was a

lot of goodwill and enthusiasm shown by players in the energy sector. In fact logistics put in place were not adequate to carter for all the interested exhibitors to the exhibition held at the Arcades Shopping Mall, the main highlight for the campaign. Zambians can expect to see more energy efficiency campaigns as this should now become an annual event as was generally agreed by stakeholders in the sector.

Government played an important role in initiatives promoting energy efficiency not only by conducting the Energy Efficiency Campaign but also by reducing duty on energy saving devices as was announced by the President.

Government was also alive to disturbances in the petroleum sector. The month of June saw a record high price of crude oil on the international market when it hit US$140 per barrel. Government acted on public concerns on ever increasing costs of fuel by reducing Excise Duty. Read about efforts to cushion Zambia against catastrophic rises in crude oil prices in this edition.

During this period standards were developed to promote Bio-diesel and the establishment of Rural Service stations. To loosely quote a wise saying ‘necessity is the mother of invention.’ The standard on Bio diesel outlines guidelines to advance development of this important alternative fossil fuel in Zambia. Also read about Bio fuels pros and cons on climate, land and food prices.

The standard/code of practice for setting up rural filling stations on the other hand was a most welcome and practical standard with illegal fuel vending becoming almost entrenched in some parts of the country. Sometimes illegal vendors are the only source of the commodity in an entire district. This standard reduces costs involved in investing in establishing a filling station in rural areas without compromising on safety. With the development of this standard comes a real opportunity to traders who may have been inhibited from operating filling stations due to costs involved to operate legally while observing safety standards and maintaining the integrity of the product sold.

Enjoy the Edition.Kwali Mfuni

Sida provides technical support to the Energy Regulation Board 4

Petroleum prices up, Excise Duty down 5

Africa’s Electricity Supply Challenges 6

Livingstone public meeting 7

The Energy Efficiency Campaign 8-9

Safety, Health and Environment Corner 10

Consumer Complaints Jan – June 2008 11Bio diesel and Lead Replacement Petrol Standards Adopted 12

Utility Benchmarking and Public Reporting of Performance 13-14

ERB Wellness Programme - HIV/AIDS 15Bio Fuels - Effect on Climate, Land and Food Prices 16-17

ERB Celebrates UN Public Service Day 18-19


ERB Approves Zengamina Tariffs

The ERB approved the tariff for Zengamina Power Station Limited

for an initial period of one year beginning 1st May 2008. This was after consideration of submissions by both Zengamina Power Station Limited and the local community early this year.

Zengamina had applied to the Energy Regulation Board (ERB) to approve its proposed electricity tariffs end of 2007. In accordance with provisions of the Energy Regulation Act, Cap 436 of the Laws of Zambia, public meetings were held at Ikelenge and Nyakaseya in Mwinilunga district at which the public made submissions on the tariff application.

Zengamina Power Station is a Mini-Hydro power plant situated at Kalene, Mwinilunga in North Western Province with an installed capacity of 750kW. The project target is to supply power to Kalene Mission Hospital and the surrounding farms, business premises and residential areas. It consists of a hydro power station and a distribution network system.

The project cost is US$2.9 million and was funded through donations from well wishers and a subsidy of ZMK100 million (US$25,000) from the Rural Electrification Authority (REA). It is a private project owned by the North West Zambia Development Trust with 90% shareholding and the other 10% held by Mr. Charles Rea. It was officially commissioned on 14th July 2007 by the late Republican President, H.E Levy P. Mwanawasa S.C.

The project is operational and currently supplies electricity to Kalene Hospital while other customers are scheduled to come on stream later this year after installation of a larger transformer.

The ERB approved the tariff schedule for an initial period of one year beginning 1st May 2008 as follows:

Tariff category Connection fee - ZMK

Monthly Service

Fee - ZMK

TariffZMK/kWh

Residential1. Residential block (up to a. 1.5amps) 250,000 40,000 0

Residential meteredb.

0-150 kWh 500,000 50,000 0

151-300 kWh 500,000 50,000 315

301-450 kWh 500,000 50,000 430

Above 450 kWh 500,000 50,000 750

Commercial2.

Standard a.

Single phase 500,000 50,000 430

Three phase 750,000 50,000 430

Off peakb.

Single phase 500,000 50,000 315

Three phase 750,000 50,000 315

Community Service3.

Single phase 500,000 50,000 315

Three phase 750,000 50,000 315

Bulk User Tariff Threshold4. 750,000 50,000 1,140

After expiry of the initial one year period, Zengamina Power Station Ltd is required to apply for a three-year multi year tariff. The Energy Regulation Board waived licence fees for Zengamina for an initial three years as one of the measures to encourage private investment in hydro power generation in view of the power deficit.

Local residents celebrating the launch of Zengamina Power Station


The Swedish International Development Aid (Sida) in June signed

a Memorandum of Understanding with the Energy Regulation Board to provide technical support to the regulator. The signing ceremony was held at ERB offices where Sida was represented by the Swedish Ambassador Mr. Lars Ronnas while Mr. Silvester Hibajene ERB Executive Director signed on behalf of the Energy Regulation Board.

In his remarks at the event Mr. Hibajene said Sida has played a pivotal role in the capacity building of the ERB since 1998 when it supported training, development of regulatory instruments, development of systems and establishment of robust Information Communication Technology (ICT) tools. In 2003 Sida supported the restructuring of the electricity industry in Zambia. Sida co-funded the Cost of Service Study of ZESCO with the World Bank. The study helped the energy sector know for the first time the true cost of supplying power to various consumers in the country. Subsequently, prices were adjusted in a multi year tariff which is being implemented over a period of three years.

In his remarks, Mr. Lars Ronnas said the proposed 2008 – 2012 Swedish strategy for cooperation with Zambia identified energy as one of the three focus sectors for the development programme. He said the main goal identified in the strategy is “increased access by especially the rural population to clean energy in a well-regulated domestic and regional integrated market.”

Mr. Ronnas said the Swedish Embassy has supported the ERB since 1997 in a number of technical areas. He said the ERB is crucial in the energy sector to improving efficiency of the utilities, operations such as tariff setting considers the cost of service and the composition of such costs. Tariff checks against inefficiencies being passed on to consumers. Mr. Ronnas stressed the importance of having a pro-poor tariff structure like most sub Saharan countries. He noted that the high connection fee was impeding many poorer households from connecting to

electricity supply, thus reducing access rates in both cities and rural areas.

He emphasised the need for investments in new generation capacity. Mr. Ronnas said the ultimate role of ERB is to protect the rights of electricity consumers and safeguard fair prices and conditions for energy service utilities. He commended ERB for the establishment of Consumer Watch Groups in some parts of the country. He said that Sweden together with World Bank as co-lead in the energy sector were ready to contribute to develop the Energy Sector Advisory Group. ERB approached Sida to assist in developing the energy sector in general and the electricity sub sector in particular. Areas for which support was requested are as indicated below:

Electricity tariff determination•

Facilitation of open access in •the ESI

Promotion of non grid •electricity sources

Internal strengthening of ERB •

Electricity Tariff determination:The energy sector needs a tariff framework that will take into account investors in the energy sector such as Independent Power Producers (IPPs). This is in view of Government’s invitation to private sector participation

Sida provides technical support to the Energy Regulation Board

in the energy sector. Tariffs are therefore a critical aspect for management of the sector. This is also necessary in order to better understand implications of moving to cost reflective tariffs on the various sectors of the economy so that electricity tariffs support the economic objectives of Government.

Open access in the Electricity Supply Industry (ESI):Open access relates to rules and procedures on how the operating and pricing of the transmission network should be regulated to allow other players such as IPPs to push their power. A Grid Code has been developed to help implement this concept, however practical details of the Grid Code needs to be worked out with stakeholders. The Sida support is therefore expected to help conclude this aspect.

Promotion of non grid electricity sources:It is recognised that all citizens need access to modern and clean energy, however it is unlikely that the national grid will reach all Zambians in the near future. The ERB needs to develop a regulatory framework that is friendly to off-grid but yet modern energy supply system particularly to rural areas. Internal strengthening of ERB:The fourth component of enhancing internal capacity is an on-going effort of ensuring that the ERB as an institution continues to grow in skill and capacity to effectively regulate the energy sector.

Mr. Hibajene and Mr. Ronnas signing the MoU


The Energy Regulation Board (ERB) adjusted petroleum products

prices upwards twice in the second quarter of 2008 – in April and June.

In April the pump prices of petroleum products were revised upwards by 7% as Government reduced its subsidy on the product by half. While in June 2008, Petrol was adjusted by 9.7%, Diesel by 13.29% and Kerosene by 8.86% , as Government discontinued the subsidy but reduced Excise Duty on the above listed petroleum products by 15%.

Increments in both cases were necessitated by unprecedented increases in the international prices of crude oil. International oil prices rose from about US$48/barrel on the New York Mercantile Exchange in January 2007 to US$111.80/bbl in March 2008 and reached an all time high of US$140 on 19th June 2008.

Zambia on average, before April 2008, used to consume about 90,000 metric tonnes of crude in about two months. The cost of purchasing 90,000 metric tonne feedstock cargo,increased from US$71.5 million in December 2007 to

about US$108 million for the April 2008 cargo. This was an increment of about US$46.5 million or 65% over a period of about seven months.

Based on the “Cost-Plus model” and using the February 2008 cargo, the price adjustment should have increased by about 13%, but was only increased by 7% due to the Government subsidy which had continued at a reduced rate of 50%.

Petroleum prices up, Excise Duty down

Since September 2007, Government had been subsidising petroleum products and prices had not been adjusted despite major increases in crude oil prices on the world market as indicated earlier.

In announcing the June price adjustment, Minister of Finance and National Development (MFND) Hon. N’gandu Magande said Government had discontinued the subsidy but instead reduced Excise Duty on petroleum products as follows:

Petrol was reduced from 60% •to 45% Diesel from 30% to 15% •andKerosene from 15% to 0 •

He elaborated that the reduction in excise duty and appreciation of the Kwacha helped moderate the June petroleum products pump prices increase.

Hon. Magande added that Oil Marketing Companies (OMCs) had been requested to import finished products as it was expected that the May Cargo would run out almost two weeks before the next cargo arrived. This was due to the observed increase in demand for petroleum products particularly diesel, since April 2008.

Fuel Storage Tank

Fuel Storage Tank


The Southern Africa region is experiencing an energy crisis, of

historical proportions, as evidenced by load shedding which all the countries in the region are experiencing and this will continue for a few years because electricity demand has outstripped supply, says the Energy Regulation Board Chairman Mr. Sikota Wina.

He was speaking at the 2008 Africa Power and Electricity Congress Exhibition which was held in Johannesburg South Africa in April this year. Mr. Wina, in his statement as one of the speakers at the conference, said the Southern Africa region was experiencing load shedding on a daily or at least weekly basis. This was making a bad situation of few people accessing electricity in the region even worse.

Mr. Wina observed that Africa’s response to provide electricity to its people in the last decade had been less than satisfactory. He said access to electricity in Sub Sahara Africa had been estimated at approximately 25% in 2005, projected to rise to 35% by 2020, while other developing regions like Latin America, East Asia and the

Pacific comparison had access rates of 75% in 2005 and projected to increase to 35% by 2020. “Given the strong correlation between electricity access and human progress , Africa shall remain in the Third World for another 200 years if access to electricity does not become widespread,” he lamented.

Mr. Wina noted that much work needed to be done among policy makers, regulators, utilities, multi lateral institutions, private sector etc in Sub Sahara Africa in order to address this situation. Challenges to be addressed include the high capital costs required in establishing electricity generating stations and persistent power shortages expected in the region due to continued strong economic performance in the region which will require more electricity than is available.

He highlighted reasons documented for the power shortage in Sub Saharan Africa, as weak policy environment which changes frequently, poor finances, operational difficulties by state owned utilities and increasing costs of raw materials for energy

Africa’s Electricity Supply Challenges

Station Manager Mr Cosmas Mwenda explaining to ERB Board Chairman and Members operations at

Victoria Falls Power Station.

production such as coal, gas and diesel. He said regulators can best contribute in policy environment and utility performance by working together with utility shareholders such as Government. However, utility shareholders have to re-capitalise, restructure and infuse corporate governance best practices into utilities.

He said, as a way of promoting investment in the sector, regulators need to improve

regulatory predictability and allow utilities in the region to move towards cost reflective tariffs. Mr. Wina added that regulators have to ensure that the ‘level playing field’ created includes measures to promote other energy sources such as solar and wind. Mr. Wina shared ERB experiences in regulating the energy sector with regard to implementing cost reflective tariffs as demonstrated by the awarding of a multi year tariff to ZESCO. He told the meeting that the tariff was increased by 27% in 2007 with planned further increases in the next two years subject to improved utility performance.

Mr. Wina stressed that all countries needed to cooperate to address the energy challenge and as such develop inter-connectors and regional electricity markets. He informed the meeting that the Southern African Power Pool (SAPP) was working to include more competitive practices, while Regional Electricity Regulators Association of Southern Africa (RERA) was harmonizing regulatory rules and practices to facilitate electricity trade in the region.


Participants at a public hearing in Livingstone

The Energy Regulation Board (ERB) held an Energy Public sensitisation

meeting with about 180 Livingstone residents at Hindu Hall in May, 2008.

The meeting was held against a background of the prevailing power deficit. The main purpose of the meeting was to promote energy conservation measures aimed at improving electricity delivery in Zambia. This was one of the key public meetings planned as outreach activities for this year by the regulator.

With this meeting, the ERB embarked on a series of public sensitization programmes to enlighten the public about the power deficit. Those invited to the meeting included energy consumers, the business community, consumer advocacy groups and the general public. The meeting attracted about one hundred and eight (180) electricity consumers.

The main issues of discussion were the pricing of Petroleum products, Energy Efficiency under the Power Deficit and Electricity Tariff Setting.

ZESCO Acting Regional Manager, Mr. Siasipa made a presentation on the Electricity Supply in Southern Province – Availability, Safety and Quality issues. At the meeting, Livingstone residents were unhappy about unannounced power outages and power failures in the area. Participants said the utility should inform consumers of local power outages which were in their control as opposed to just switching off without notice.

Other complaints were that ZESCO does not interact with the community and as such was perceived as a ‘monster’ by some residents. Consumer advice to ZESCO was that the utility should reinforce its efforts to improve relations with local people.

It was highlighted in the meeting that through the Consumer Charter, consumers should be able to take the utility to task over the failure to fulfill its obligation and address complaints of poor quality of power. There were suggestions for ZESCO to connect

Livingstone public meeting

Livingstone residents to Victoria Falls Power station as a way of minimising power interruptions.

Another issue of concern was the late delivery of bills. Consumers suggested that bills be delivered before the month end to enable consumers budget appropriately to settle bills.

Common complaints related to delayed new service connections by ZESCO, which perpetuates illegal connections by some consumers; Metering as opposed to putting consumers on fixed charges; Electricity Tariffs’ were too expensive particularly for rural dwellers; Consumers’ inability to claim security deposit upon vacating their premises; and that the utility should compensate consumers for damaged equipment.

Livingstone residents in their appeal to ERB urged the regulator to safeguard interests of consumers through out the country, particularly in rural areas. They also urged ERB to conduct a perception study on the regulator and its role in the country.


The Ministry of Energy and Water Development in collaboration with

the Energy Regulation Board (ERB) and other stakeholders in the energy sector held an Energy Efficiency Campaign June 2008.

The campaign was one of the initiatives to respond to the power shortage in Zambia and the SADC region.

A number of initiatives have been put in place by both Government and other players in the energy sector to mitigate against this energy challenge.

The Energy Efficiency Campaign was one such initiative, with the main objective of promoting energy efficiency practices and alternatives. It was also intended to promote demand side management and build

Mr. Kalumiana, accompanied by CEOs of Energy Organisations touring stands at the Energy Exhibition

The Energy Efficiency Campaign

Energy efficiency devices on display at the Energy Exhibition

Continued on page 9


on the Government pronouncement to waive duty on selected energy saving devices as announced by the Republican President in March this year.

The campaign under the theme ‘Energy Efficiency – achieving sustainability together’ and conducted from 9th to 14th June 2008 was launched by the Minister of Energy and Water Development, Hon. Kenneth Konga.

The main idea behind the Energy efficiency Campaign was to sensitise consumers to adjust their use and demand for electricity, referred to as ‘Demand Side Management’ in regulatory terms, in response to the limited capacity available. The campaign was intended to create a forum for stakeholders and players in the energy industry to convene and showcase initiatives in energy conservation to the public.

The major highlight of the week was the Energy Exhibition at the Arcades Shopping mall, which provided an opportunity to showcase energy efficiency products to the public. The exhibition provided a one-stop shop for consumers to learn about energy

conservation practices to implement in their homes and showcase energy efficient products.

There was an overwhelming response by exhibitors to participate in this event. Over 20 energy companies expressed interest to exhibit, but unfortunately, the number of exhibitors was restricted by the size of the Marquee pitched at the

Arcades shopping mall which could only accommodate 13 companies. Exhibiting companies included Department of Energy, ZESCO, ERB, REA, CEC, Specialised Systems, Davis and Shirtliff, Standard Chartered Bank, Chloride Zambia, GTZ, among others.

There were other promotional activities for the Week-Long campaign which included a news paper insert in the print media; television and radio interviews and promotional adverts on radio, television and the ERB website. This all culminated in the three day exhibition, where the campaign was officially launched and a quiz was conducted.

ZESCO Senior Manager for Marketing and PR Mrs. Monica Chisela explaining to stand Visitors

Energy quiz during the Energy Exhibition

A coal stove on display at the energy efficiency exhibition


Safety, Health and Environment Corner

Dangers of static electricity at petroleum installations

Introduction

Static electricity is a phenomenon where electrical charges build up on the surface of a material, and it is called “static” because there is no current flowing. Static electricity is usually associated with nonconductors of electricity leading to the accumulation of the charge. Static electricity is most prevalent in cool and dry environments.

Actions that lead to production of static electricity include rubbing certain materials together which may result in objects of opposite charge being attracted to each other and if the distance is not too great, electrons may jump across the gap. The spark associated with static electricity is caused by electrostatic or static discharge due to the neutralization of the excess charge by a flow of charge to/from the surrounding.

Static electricity during loading, Offloading and at the filling stations

As regards service stations, no self service filling stations exist in Zambia, therefore the danger of static electricity-caused fires at the pump is non existent, though the potential still exists. Many of us have seen motorists go in and out of their vehicles while refueling is going on. Occasionally, we also see fuel attendants chatting on the phone while refueling vehicles or in the vicinity of fuel pumps. These are dangerous activities and are not allowed at filling stations and petroleum installations in general.

We highlight some tips below on safe refueling practices, despite the fact that the danger associated with static electricity at filling stations in Zambia may be remote:-

Turn off the engine and engage the hand •brake.

Turn off the radio and lights•

Mobile phones should not be used while •refuelling

Ensure that the nozzle is properly inserted into •

the vehicle’s fuel tank before refuelling.

Motor bikers must dismount when refuelling.•

Do not get in and out of the vehicle while •it is being refueled. The static electricity accumulates when the motorist rubs their clothes against the upholstery of the seats.

Fuel attendants should avoid splashing •or spilling fuel onto the ground during refuelling.

Loading and offloading

The Zambian standard for above ground petroleum installations (ZS 385:1) requires that before any connections are made to trucks or rail vehicles and before any flow of the product commences, an electrically continuous path (bond) shall be in place. Splash filling or splash loading should be avoided as it can lead to accumulation of static electricity. The accumulation of static electricity shall be reduced by earthing and bonding the loading or the unloading equipment (or both) in accordance with standard requirements.

This precaution is applicable both at bulk fuel installations and filling stations. To compliment this safety precaution, it is a requirement that during loading and offloading operations, only offloading pipes that are electrically continuous are used. A couple of years ago, a fuel tanker in Zambia caught fire due to static electricity discharge during offloading due to failure to ensure electrical continuity by bonding/use of recommended offloading pipes.

In conclusion always close the car door when getting out or into the vehicle as any static electricity accumulated will be discharged on touching something metallic.

References

ZS 385: Part 1 – The Petroleum Industry – Code of Practice – Storage and Distribution of petroleum products in above-ground bulk installation, Zambia Bureau of Standards, 2003. www.shell.com

By Allen Polito


The Energy Regulation Board (ERB) recorded a total of 177 consumer

complaints in the first half of the year and resolved 81 cases. This represents an addition of 49 new cases for the April to June 2008 period, as 128 cases were reported in the first quarter.

The highest number of complaints, as observed from recent trends, was power outages at 68 cases reported, while billing which traditionally has higher figures was second highest at 61 cases. Other cases reported to the ERB included disconnections, surcharges and delayed service connections. Relevant utilities were informed on cases reported to the regulator and

have since been resolved.

The details of complaints handled during the period under review are highlighted in the table below:

Meetings were held with ZESCO and complainants to discuss outstanding complaints. Some of the key meetings included representatives of business houses in Kitwe’s Buchi, Kwacha township and Lechwe School who complained that their activities were being affected by load shedding. ZESCO agreed to exempt Lechwe School from load shedding during the exam period.

The ERB conducted follow up

Consumer Complaints Jan – June 2008

CATEGORY RECEIVED RESOLVED RESOLVED%

Billing 61 33 54%

Power Outages/Service interruption 68 34 50%

Delayed New Service Connection 11 2 18%

Surcharges 6 1 17%

Disconnection 8 4 50%

Compensation Claims 1 0 0%

Service/ Personnel 2 0 0%

Fuel Contamination 5 2 40%

Poor Quality of Service 4 3 67%

Metering 4 2 50%

Poor Quality of Fuel 1 0 0%

Other 6 2 33%

TOTAL 177 81 46%

inspections on electricity complaints reported in Luanshya, Ndola - Pamodzi and Kabushi. The Luanshya inspection was on a delayed new service connection, referred to ERB by the Investigator General.

Meanwhile, in order to facilitate prompt resolution of complex complaints, an inter-departmental committee has been constituted comprising engineers, lawyers, economists and consumer personnel at ERB. The committee seeks to examine complaints and determine measures to promptly and adequately resolve them from all angles. This will in the long run reduce the lead time in consumer complaints resolution.


The Zambia Bureau of Standards approved standards in Bio-fuels, Lead

Replacement Petrol and Establishing Rural Filling Stations in April this year.

The standards on bio-fuels came at an opportune time with crude prices reaching all time high, while the standard on establishing filling stations in rural areas was meant to offer a practical solution to a problem in the petroleum sector common in many parts of Zambia

The Bio diesel and Lead Replacement Petrol (LRP) standards prescribe the quality of product which should be sold on the Zambian market. The standard on bio diesel was developed in order for the Energy Regulation Board (ERB) to regulate developments in the bio fuel industry and ensure that interests of all stakeholders are protected.

The LRP standard outlines product specifications to provide the consumer with acceptable fuel quality and to enhance trade within the region. The phasing out of leaded petrol in Zambia has made it necessary to develop standards to regulate LRP as an alternative fuel for pre 1986 vehicles that are not designed to use unleaded Petrol. LRP is a type of petrol that has been introduced to cater for petrol propelled vehicles which were running on Leaded Petrol, in line with the phase out of leaded petrol in Zambia.

Lead Replacement Petrol (LRP) is gasoline (petrol) with an additive that gives valve seat protection to those cars that may require it. In Zambia, Lead Replacement Petrol contained Manganese instead of Lead which had lower health risks than Lead.

Research has revealed that Lead emitted into the Environment has harmful effects on human health.

The standard on code of practice to run rural filling stations has been developed in a bid to encourage the setting up of stations in deficit areas such as rural areas. The standard is particularly important as it addresses the lack of filling stations in remote and rural areas most of which are serviced by illegal fuel vendors. Illegal fuel vending poses a risk in safety and quality of the product sold.

Meanwhile, fifteen other energy related

Bio diesel and Lead Replacement Petrol Standards Adopted

standards initiated by ERB were also adopted by the Zambia Bureau of Standards. The ERB developed and drafted the Standards in consultation with relevant stakeholders which included the Engineering Institute of Zambia (EIZ), Environmental Council of Zambia (ECZ), Oil Marketing Companies and the Zambia Bureau of Standards (ZABS).

The standards are either revised or complete new ones to reflect developments in the energy sector in the recent past. In the case of revised standards, it is standard practice to revisit them after every five years in view of the changes in the sector.

The standards developed are as follows:

ZS 702:2006 – Automotive 1. Biodiesel – SpecificationZS 706: 2007 - Denatured Fuel 2. Ethanol For Blending With GasolinesStandards on Biodiesel For Use As 3. Automotive Spark-Ignition Engine Fuel – Specification ZS 703: 2007 - Rural Filling Stations 4. - Code Of Practice ZS 704: 2007 - Transportation 5. Pipeline Systems For Liquid Hydrocarbons – Code Of PracticeZS 429:2007 - The Handling, 6. Storage, And Distribution Of Liquefied Petroleum Gas In Domestic, Commercial, And Industrial Installations: Part 4: Transportation Of LPG In Bulk By

Road - Code Of PracticeZS 667: 2005 - Q u a l i t y 7. And Transportation Of Coal – SpecificationZS 687-1: 2006 - Sampling Of 8. CoalZS 687-2: 2006 - S a m p l e 9. Preparation Of CoalZS 686-1: 2006 - 10. Determination Of Ash Content In CoalZS 686-2: 2006 - 11. Determination Of Total Sulphur In Coal- Eschka MethodZS 686-3: 2006 - 12. Determination Of Volatile Matter Content In CoalZS 686-4: 2006 13. - Determination Of Inherent Moisture Content In CoalZS 686-5: 2006 - 14. Determination Of Gross Calorific Value Of CoalRevised ZS 371: Road Tank Vehicles 15. For Petroleum-Based Flammable Liquids – SpecificationRevised ZS 372: Operational 16. Requirements For Road Tank Vehicles – Code Of PracticeRevised Unleaded Petrol Standards 17. ZS 395:2000.Lead Replacement Petrol 18. (Gasoline) For Motor Vehicles – Specification

Copies of the above listed standards can be accessed from Zambia Bureau of Standards offices at Lechwe House on Freedom Way in Lusaka.

A basic filling station meeting safety requirements.


BenchmarkingMany Governments in Africa and the developing world have in the last decade undertaken wide ranging electricity sector industrial reforms involving institutional, legal, structural and organizational changes. These reforms have seen a transformation of the industry hitherto dominated by state owned vertically integrated monopolies which are either being unbundled, privatized, corporatized and commercialised or even placed under management contracts.

Electricity sector reforms are transforming the structure and operating environment of the electricity industries across many countries. The central aims of these reforms are to introduce market-oriented measures in electricity generation and supply, and improve the efficiency of the natural monopoly activities of distribution and transmission through regulatory reforms.

These reforms have also seen the establishment of autonomous regulatory

agencies separate from the mainstream policy making ministries or departments. With the establishment of the regulatory agencies, there is more emphasis and focus on the following issues;

Cost recovery pricing methodologies

Enhanced observance of corporate governance principles

Improved technical and operational efficiency

Improved quality of service

A new approach to Electricity Utility regulation is also emerging. This approach takes the form of Benchmarking i.e. ’’ the comparison of some measure of actual performance against a reference or benchmark performance.’’ Benchmarking attempts to create incentives for the utility to move towards a desired level of expected performance defined in terms

of other similar industry players or its own past performance levels.

The following are the key areas earmarked for benchmarking focus, In addition to others depending on desired outcomes; Cost containment, staff productivity, access rates, quality of service and technical and operational efficiency.

Benchmarking of cost efficiency has recently seen growing use in energy utility regulation. However, the state of the art has been limited in many countries by the scope and non-availability of data sets and or simply poor data quality.

Benchmarking has in the last decade become a widely used tool in the assessment of energy utility performance. Managers generally use benchmarking studies to assess how well their companies are doing. Benchmarking is also used in the regulatory arena to help establish utility rates. In recent years, benchmarking has played an important role in ratemaking the world over. e.g. in Australia, Canada,

UTILITY BENCHMARKING AND PUBLIC REPORTING OF PEFORMANCEBy Rodgers K. Muyangwa

Continued on page 14

ZESCO Sub-Station in Mpika.


Europe (Britain and Norway), and Latin America (Bolivia and Panama).

The data available for utility benchmarking are often quite limited. In most countries, where data is available, such data is available for only a few years. Few countries have gathered the data needed for accurate benchmarking. Given the fact that most countries in Africa still have state owned vertically integrated Utilities, international benchmarking can produce more sizeable data sets.

However, this has been hampered by a lack of data standardization and by differences in the scope of activities that utilities perform, geographical spread of the domestic markets and even market structures obtaining in these countries.

Public Reporting of Service PerformanceIn some countries regulators or even utilities themselves are routinely required to publish indicators of utility service performance through the public media or indeed in their annual reports. A public record of poor performance on cost levels or poor cost containment, staff productivity, access rates, quality of service and technical and operational efficiency have proved to be a powerful tool of pressurizing utilities to continuously strive to provide better services to consumers.

In South Africa for example, the Regulator NERSA requires that Eskom incorporates its

actual performance against set regulatory targets in its annual reports. Generally, disseminating information to consumers in this way is likely to lead to demands on regulated companies whether public or private to improve performance. This becomes even more imperative with the transition to higher but cost reflective tariffs that electricity and other service utilities in Africa are adopting.

Where benchmarking has proved to be successful, it is incumbent upon the Regulators to publish the performance indicators annually in easy-to-read -and -understand language and formats. This takes the form of the utility’s actual performance on a benchmarked service offering and the regulators target for that year and the appropriate resulting score. If this report is made by the regulated company it would be appropriate for the company to include a factual commentary explaining the variance between set target and actual performance including whether factors constraining performance were controllable or uncontrollable. However the Regulator is free to undertake independent verification audits. The public would normally form their own opinions on the basis of the quality of service they get.

What to watch out for!!!The potential power of utility performance reporting looks so appealing. However it is important to bear in mind that this is not likely to happen on the utility’s own

volition due to the following factors;

Vested interests: Utilities maybe naturally unwilling to share information with the public on under-achievements but would be more inclined to offer blanket statements explaining poor quality of services. In addition most utilities are Government owned and public reporting on the performance of these utilities is thought to reflect Government performance. This creates a tendency to cover up under performance.

Insufficient data: Being a new regulatory approach data specifically relating to the performance of utilities maybe scanty or unavailable.

Low consumer expectation: In most countries the provision of utility services is still done on subsidized tariffs. In this situation, consumers are captive because of uneconomic tariffs and so have limited say in asking for efficient services.

Conflict in policy frameworks: Sometimes the policy framework governing the management of the sector or even political pronouncements by Government officials are in conflict with the existing policy provisions and rational economic and business principles. For example although a policy may clearly state that it provides for cost reflective pricing this may conflict with another policy advocating universal access and ‘’affordable prices’’.

In conclusion, the benefits that would accrue from embarking on public reporting of the performance of utility companies are obvious. However, without the right performance indicators to report on, the exercise is likely to result in conflicts and mistrust among stakeholders in the industry. Therefore the choice of appropriate objective indicators lays down the bedrock of public reporting. Indicators should draw on data that is reliable, relatively easy to collect and not lend itself to multiple interpretations.

Finally, one thing for sure, in benchmarking is that, the process and results of benchmarking shared with the public and all other stakeholders will place pressure on the utility to improve its performance.

Chishimba Falls Mini Hydro Power Station


In order to combat HIV/AIDS at the workplace the Energy Regulation Board (ERB) like many other

organisations has come up with strategies to mitigate the effects of the pandemic on staff members and their families. The following are some of the strategies;

HIV/AIDS Policy The ERB has put in place a proactive HIV/AIDS policy at the workplace. This policy encourages employees to know their HIV/AIDS status by going for Voluntary Counselling and Testing (VCT). The policy also provides medical care to the ERB employees and their spouses living with HIV/AIDS. The policy also extends to their registered dependants. To this effect, those in need of Antiretroviral drugs (ARVs) are assisted the same as those with opportunistic infections.

As such the ERB has put in place the following awareness activities,

Training of HIV/AIDS Peer EducatorsPeer educators have been trained and these help to sensitise their colleagues on the importance of knowing ones HIV/AIDS status, how to prevent infection and how to live positively.

Sensitisation talks Whenever there is a staff meeting, HIV/AIDS awareness talks are given by peer educators. In addition, workshops on HIV/AIDS are held quarterly. These workshops also extend to include the spouses/ partners of ERB employees.

HIV/AIDS articlesHIV/AIDS articles are published in the ERB quarterly magazine ‘The Regulator’ An example of such an article can be viewed on the ERB website, www.erb.org.zm. In the same vein, HIV/AIDS messages are displayed on payslips.

Sport In ActionThe ERB has put in place several staff welfare programmes such as social football, social sports etc. As the saying goes, “all work and no play makes Jack a dull boy!” Social football accords employees an opportunity to interact during weekends and this has brought about closeness amongst the employees. Other than just interacting, social football is an avenue for encouraging employees to be physically fit hence improving their health.

ERB WELLNESS PROGRAMME - HIV/AIDS

The ERB takes part in sporting events such as inter-company relay race as well as Millennium Development Goals (MDGs) marathon race. This too, encourages the staff to be fit and consequently improve their health and general well being.

SAFETYThe ERB realises that safety is paramount and as such staff have been trained in basic safety procedures in case of emergencies such as fire and/or bomb scare etc.

By Derrick Ngubai


The demand for fossil fuels has continued to rise and there

are concerns that worldwide demand will outpace worldwide production capacity. This has led to the notion that the world might have reached “Peak Oil”, a situation where the world oil discoveries have peaked and now follow a steady decline. Because of uncertainties in the supply of fossil fuels as a result of disturbances in oil producing areas, natural disasters, increased demand from emerging nations such as India and China etc, alternative and renewable fuels such as bio fuels are becoming prominent and said to offer a viable option that can assure sustained energy security, especially in non-oil producing nations.

Bio fuels have been extensively touted as the panacea for the dwindling fossil fuels and resultant sky rocketing fuel prices. Bio fuels are further said to offer environmental, social and economic benefits due to expected reduction in carbon emissions and rural development. However, of late, a lot of concern has been raised that increased use of bio fuels might indirectly lead to increased net greenhouse gas (GHG) emissions because of land use change and deforestation, raising questions about potential climate benefits. The other concern raised is that increased food commodity prices worldwide could be attributed to the rise in demand for bio fuels. Growing of energy crops in the United States of America displaced existing agricultural production. This land-use change with corresponding increased net GHG emissions has added to the increasing clamour in the scientific world for caution in the alleged indiscriminate roll out of bio fuels.

In view of conflicting stories on the environmental impacts of bio fuels and its effect on world food commodity prices, the UK’s Renewable Fuels Agency (RFA) commissioned a study in March 2008. The resultant report. “The Gallagher Review,” published in July 2008 confirmed the position of bio fuels as fuels for the future, with many benefits as long as use of land suited for agricultural production is not used for energy

crops production as the demand for bio fuels rises. Because of the fear that the increasing demand for bio fuels could accelerate land-use change which, if left unchecked, would result in loss of diversity and lead to higher GHG emissions rather than savings, the Gallagher report recommended that the introduction of bio fuels should be properly managed to minimize the possible detrimental effect on

BIO FUELS - EFFECT ON THE CLIMATE, LAND AND FOOD PRICESBy Allen Polito

Jatropha plantation


BIO FUELS - EFFECT ON THE CLIMATE, LAND AND FOOD PRICES

the climate, land and food prices.

As the bio fuels sector continues to grow, it has become imperative for countries to determine the exact amount of land required for bio fuels production to meet set targets. In order to avoid the pitfalls that may arise when agricultural land designated for food crops is used and the real danger that exist regarding food insecurity, a deliberate policy is required

to ensure that only suitable idle or marginal land or non-food energy crops are utilized for the production of bio fuels (Gallagher Review, 2008).

To ensure that bio fuels do not affect food production and also that the country reaps maximum benefits from the bio fuels sector, it is cardinal to establish the total number of growers of bio energy crops, how much total

land area is being used and how much of the idle or marginal land should be earmarked for bio fuels productions to meet set targets. Thus, the Ministry of Energy has undertaken a study to establish a data base of bio fuels producers in Zambia. Such a study will ensure that the country reaps maximum benefits from bio fuels production while protecting the environment. The Gallagher Report (2008) concludes that a sustainable bio fuels industry is possible as long as comprehensive and mandatory sustainability standards are developed and implemented. In Zambia, about 7% of the total land area is arable, while only 0.03% is dedicated to permanent crops.

With the foregoing in mind, bio fuels are therefore poised to play a significant role in the development of Zambia as far as rural development (including economic empowerment), energy security and reduction of GHG emissions is concerned.

References

En.wikipedia.org/wiki/Geography of Zambia

Energy Institute; Future fuels, 2008

Searchinger, R. Heimlich, R.A. Houghton, F. Dong, A. Elobeid, J. Fabiosa, S. Tokgoz, D. Hayes, T. Yu, (2008) Use of U.S. Croplands for Bio fuels Increased GreenhouseGases through Land-use change, Science Express (Feb. 7, 2008).

The Gallagher Review of the indirect effects of bio fuels production, Renewable Fuels Agency, July 2008


The Energy Regulation Board (ERB) participated in commemorating the 2008 United Nations Public

Service (UNPS) celebrated worldwide on June 23rd and held in Zambia for the first time.

The United Nations Public Service (UNPS) Day has been celebrated worldwide since 2003 when it was established. The main objective of the UNPS is to recognize the institutional contribution made by public servants to enhance the role, professionalism, image and visibility of the public service sector. This is in accordance to a decision (2000/231) passed by the Economic and Social Council of the United Nations. The guiding principle behind establishment of UNPS is the UN millennium declaration, which emphasizes the role of democratic and participatory governance in assuring the rights of both women and men.

The Specific objectives of the UNPS are as detailed below:

To reward service to citizens and motivate public •servants worldwide to sustain the momentum of innovation and the improvement of the delivery of public services

To collect and disseminate successful practices and •experiences in the public administration in order to support efforts for improvements in country level public service delivery

To counterbalance any negative image of the public •administration, raise the image and prestige of public servants and revitalize public administration as a noble discipline on which development greatly depends through success stories,

To promote, encourage and facilitate networking •among institutions and organisations relevant to public administration and strengthen the network of UN programmes on Public Administration and development

To enhance professionalism in the public service in •rewarding successful experiences in innovations and excellence in the public service.

In Zambia this important day was observed by all Government Ministries and agents. The Energy Regulation Board participated under the auspices of the Ministry of Energy and Water Development. Other Statutory bodies which participated included the National Water Supply and Sanitation Council (NWASCO) and the Rural Electrification Authority (REA).

The day’s activities commenced with participants marching from Manda Hill Shopping Complex to Mulungushi International Conference, where the main event was held.

Key speakers at the event included Secretary to the Cabinet, Dr. Joshua Kanganja, Zambia Congress of Trade Unions (ZCTU) President Leonard Hikaumba and United Nations officials based in Zambia. Speakers emphasised the importance of dedicated public service workers who are critical to delivery of public services.

The celebrations were preceded by a road show which took place at Arcades Shopping Complex from 20th to 21st June. All the participating Government Ministries and Institutions displayed information on the type of services provided to the Public. ERB officers were also on hand to provide information to the visitors on the organization’s work in regulating the energy sector in Zambia. Visitors were also given information through brochures, booklets and magazines.

Visitors to the ERB stand were interested in details on its operations and urged that similar outreach programmes should be developed for people in rural areas of the country.

It is said that energy is the engine of development and the Zambian Government resolved that the energy sector should be regulated. As such Public Service workers at the ERB have a challenge to ensure that the energy sector is well regulated and the ordinary consumers protected.

ERB CELEBRATES UN PUBLIC SERVICE DAYBy Davies G. Mupenda

Public Service workers in Zambia celebrating UN Public Service Day


Secretary to the Cabinet Dr. Joshua Kanganja reading his speech at Mulungushi International Conference Centre

ERB members of staff exhibiting at the UN Public Service exhibition at Arcades Shopping Mall

Other Public Service workers exhibiting at Arcades Shopping Mall

Drama performances at the UN Public Service exhibition at the Arcades Shopping Mall



The SPM covered in a net to prevent sea gulls nesting on it

Tazama Tank Farm

The Tazama Tank farm is a storage facility for the crude pumped from ships. The Tank farm has a total of 6 storage tanks each with a capacity of 35,000m3 and a combined total of 210,000m3. The Tank farm also has a pump station, which pumps the crude through the pipeline. Each pump station gives the crude oil enough pressure to �ow to the next pump

One of the reciprocating engines at the Morogoro pump stationOne of the feedstock tanks at the Tank farm that has just undergone rehabilitation

station such as the one stated in the section below.

Morogoro Pump Station

The entourage visited Morogoro Pump Station about 200km from Dar-es-Salaam. There are a total of 7 pump stations along the pipeline from Dar-es-Salaam to Ndola. Due to the hilly terrain in Tanzania, there are 5 pump stations to push the crude through

the pipeline, which in one instance is almost at a vertical angle. There are 2 pump stations in Zambia, which has a relatively level terrain.

All the 7 pump stations use reciprocating engines which run on crude oil. These machines were bought second hand in 1968 and they are almost obsolete. To run, they need special arrangements for maintenance from the supplier. As

The Energy Regulator Newsletter

ENERGY REGULATION BOARD“We safeguard your interests”

To regulate the energy sector in a transparent, effective and efficient manner that safeguardsthe interests of all stakeholders.

THE ENERGY REGULATOR Newsletter - erb.org.zm · The Energy Regulator Newsletter 3 ERB Approves Zengamina Tariffs The ERB approved the tariff for Zengamina Power Station Limited for

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