Zambia urged to open up electricity market

By BUUMBA CHIMBULU

AFRICA GreenCo says Zambia needs to strengthen its electricity market through transparent trading arrangements, standardised rules and regional power trade to attract investment and potentially lower electricity costs.

Managing Director Wezi Gondwe said the country needed to move away from traditional power financing models that largely depended on Government-backed guarantees and bilateral agreements between electricity suppliers and consumers.

Speaking at the Zambia Commodities Market Outlook Conference, Mr Gondwe said existing arrangements exposed independent power producers (IPPs) to payment risks, particularly where projects depended on individual electricity buyers.

He said Africa GreenCo was promoting market-based structures that could redistribute and manage these risks, making power projects more attractive to financiers without necessarily transferring the entire burden to Government.

“Traditional financing arrangements required developers to secure power purchase agreements with individual buyers, exposing them to the risk of delayed payments or failure by offtakers to meet their obligations,” Mr Gondwe explained.

However, market intermediaries could aggregate different sources of electricity generation and consumption, allowing producers to sell power into a wider market instead of depending on a single customer.

He said access to regional electricity markets would expand opportunities for power producers to sell surplus electricity beyond the country’s borders while reducing exposure to country-specific risks.

“Africa GreenCo was engaging financing institutions on projects structured around this model to demonstrate the potential of market-based arrangements to reduce investment risks,” Mr Gondwe said.

He also identified standardised rules for accessing electricity transmission and distribution infrastructure as critical to improving investor confidence.

He said ongoing electricity market reforms, being developed through consultations involving the Energy Regulation Board and supported by Copperbelt Energy Corporation (CEC), would establish clearer conditions for market participants.

Mr Gondwe said the framework would replace individually negotiated arrangements with standardised terms for accessing network infrastructure operated by entities such as Zesco and CEC.

He said this would give investors greater certainty about the costs of entering and operating in the electricity market, enabling them to assess project viability and expected returns more accurately.

Ends.