Western Power Company - Business Focus
Once, Zambia had Africa’s second-lowest energy tariffs. But after years of under-investment, the country’s power production has struggled to meet demand, leading to 20 hour-a-day load shedding and 63% of the. . .
Once, Zambia had Africa’s second-lowest energy tariffs. But after years of under-investment, the country’s power production has struggled to meet demand, leading to 20 hour-a-day load shedding and 63% of the country’s population being unconnected to the grid in 2024. The Western Power Company was established to address that need. Thefirmis behind a number of energy projects, the most prominent of which is theNgonye Falls Hydroelectric Project, a 180 megawatt plant that will add 8% to Zambia’s total power generation capacity, generating 830 gigawatt hours a year of clean, renewable and cost-effective energy to supply local and export demand. When finished, it will create enough electricity to power the total population of Zambia’s Western Province. The company is the brainchild ofSipho Phiri, the company’s Chairman, andTom Younger, its Managing Director. “We were born in the local government hospital, we went to the same nursery and primary school, and together we saw that Zambia’s energy requirements would need addressing,” Phiri tells us. Addressing the CrisisThe project was not immediately welcomed with open arms. 90% of Zambia’s power generation is owned by the state, and so there was resistance to the idea of private involvement in the sector. “Neither Tom nor I are believers that the State should have no involvement or that everything should be privatised,” Phiri tells us. “ZESCO[State-owned power generation company Zambia Electricity Supply Corporation Limited] is the backbone of Zambia’s power generation and transmission in Zambia, and it should remain so. Plenty of countries have privatised their power generation and transmission systems, effectively giving a private company a state monopoly that makes power expensive. There needs to be a balance, and private firms need to be introduced as part of that balance. ”Fortunately, from the earliest stages of the project, the Western Power Company was able to find support within the Government. “Although we received resistance, the President very quickly understood that there needed to be some structural changes,” says Phiri. “My mantra is that the only thing worse than expensive power is no power. When the energy crisis brought about 20 hours a day of loadshedding, that showed the truth of it. The mines were among the loudest talking about cheap subsidised power, but we showed that they can still make money with more expensive power, and at least they will have power. The important thing is that the cost be reflected in the tariffs. ”Currently, the Western Power Company has completed all the technical and environmental studies necessary for the Ngonye Falls Hydroelectric Project to go ahead. It is the first project to receive the Gold Award from theHydropower Sustainability Standard. “We have been meticulous in our preparation, and we are now at the final stage,” Phiri says. “We are sorting out debt and equity, which we hope to complete by December. Construction, we hope to start in January or at least the first quarter of next year. 99% of all the project documentation is done. It is simply a question of raising the $750 million needed for construction. ”A Unique ProjectThe reason why this project is such a fantastic opportunity is theunique geographical locationit has to work with. The Zambezi River is a kilometre wide at the top of the river, before it goes over the Ngonye Falls into a narrow gorge. “What makes this project special is that it has an extremely small environmental and social impact on surrounding communities as well as the river itself,” explains Phiri. “The second, more technical issue is that the river itself is quite large, but extremely climate resilient. It benefits from a geological quirk. ”To generate energy, a hydro power plant needs a combination of water flow and head height. The Zambezi River, downriver from the falls, has a head height that is particularly climate resilient. A draught upstream will cause less water to come down the falls, but the shape of the river means that with less water there is actually a higher head. “In our simulations during a drought, the water flows might be down 53%, but the power generated will only be down 12%, making it resistant to changes in the climate,” Phiri says. “It will be invaluable as a part of Zambia’s grid where there is currently no power generation, creating immense stability for the whole of ZESCO’s grid and creating a foundation for more intermittent renewables like solar and wind power. ”But for Phiri and Younger, this is about much more than the already invaluable addition to the Western Power Company’s Grid. It is about demonstrating that it is possible to execute big projects in Zambia, carried out by and led by Zambians. “We can found them, and we can develop them,” Phiri says. “Early on in the process, we had gone in withINFRACO AFRICAas a partner, and they’ve been very patient with capital. They deploy capital to help projects develop when other private sector sources would not. ”As Western Power Company approaches the construction stage of the project, it has followed the highest and most onerous tender standards to selectPower China Internationalas its EPC contractor. The company has met all requisites and national statutory conditions. They will also be responsible for hiring and staffing from local communities, and through training, developing their skills and upskilling local people. ”“Between 3,000 and 4,000 people will be employed locally over a four-year period of construction,” Phiri says. “After that, it will be Zambian staff who run the project on an ongoing basis for the next 50 years. ”That employment is just one of the ways in which the Ngonye Falls Hydroelectric Project is set to benefit Zambian communities. Supporting CommunitiesFrom the outset, the Western Power Company has been in close communication and collaboration with its host communities. “We have had strong stakeholder engagement from the beginning,” saysAngela Chisembele, a Consultant for the Western Power Company. “We keep the community informed and include them in all our discussions and activities. The river straddles two communities, and we have community committees on both sides made up of local leaders. ”Part of that process means ensuring that any CSR projects carried out by Wester Power Company are led by the community themselves, rather than imposed on them from above. The Western Power Company has built houses for teachers near local schools, bringing more teachers into the area and allowing for more classrooms. The company has also funded social amenities, given local football teams new gear and held tournaments for them. During the height of the Covid pandemic, Western Power Company provided PPE. “A lot of our CSR is ongoing, supporting traditional annual ceremonies,” Chisembele tells us. “At the same time, we have trained a hundred youths from local communities in skills such as carpentry, bricklaying, and machinery, with monthly trade skill courses at local trade schools. ”Out of those hundred, 97 have graduated and are now working in a range of trades. Chisembele hopes that many of them will eventually come to work at the power plant itself, securing Zambia’s future in more ways than one. “This plant wasn’t a brave business decision, it was logical,” Phiri says. “There was an energy crisis coming, Zambia in particular and Africa as a whole had a huge energy shortage, and we had this plan for a power plant. ”