by Richard Nyamanhindi – SANF 08 No 30
“Energy trading” is a new initiative that offers more secure and adequate power supplies for business and residential electricity in southern Africa.
This form of trading in energy supplies allows countries to buy and sell surplus power through an ever-widening network of electrical lines and relay substations.
Trading has been brisk among the 14 member states of the Southern African Development Community (SADC), and energy trading was up 20 percent in March.
The increase in trading was facilitated by the coming online of key regional interconnectors that went down the previous month, in a situation that left the Southern African Power Pool (SAPP) operating as three separate islands.
Projects such the recently concluded five-year agreement between Eskom of South Africa and the Mozambican government to supply an additional 250MW of power from Cahora Bassa hydroelectric power station has further increased energy trading between those two countries.
The agreement was signed in Mozambique at the beginning of April and according to the agreement, Cahora Bassa will make 250MW available to Eskom from its fifth generator, bringing the total amount Eskom can import from Cahora Bassa to 1500MW.
EDM, the Mozambican electricity utility, will also receive 50MW additional capacity from the fifth generator at Cahora Bassa.
This 250MW capacity for Eskom is in addition to the current long-standing agreement between Cahora Bassa and Eskom.
One hundred megawatts of this additional capacity was already being supplied as from March this year and this will be increase in the coming weeks.
The power will be supplied over a network extending through Zimbabwe and Botswana to the South African grid or via the High Voltage Direct Current (HVDC) line.
This year will also see the completion of two interconnector projects between Zambia and Tanzania, and another one between Zambia and the DRC, a situation that will make it possible for an additional 660MW in the region.
“The projects will undoubtedly enhance energy trade between Member States,” says SAPP.
“Combined with this have been improvements in regional cooperation through government to government agreements such as the ZESA-NamPower accord to revamp Hwange power station last year.”
There is no doubt that these projects have reduced inadvertent power flows and power oscillations that had affected the region the start of this year.
With all SADC member states except the island states of Mauritius and Madagascar involved in the regional power pool, financing for capital-intensive energy producing projects will need to be facilitated as agreed at the meeting of the SADC Ministerial Task Force on Implementation of Power Sector Projects held in Botswana in February.
Energy-producing facilities, be they hydroelectric, coal, solar or nuclear, are tremendously expensive undertakings. Member states have found there is power of another kind in numbers, and they have combined to pool resources.
South Africa, Mozambique and Swaziland, for example, have become the tri-nation members of the Lubombo Spatial Development Initiative (LSDI), named after the Lubombo mountain range shared by those countries.
The three nations have benefited from the energy needs of the new Mozal Aluminum Refinery, located on the outskirts of Maputo, the capital of Mozambique.
The three nations’ utility companies formed a new company MOTRACO to build and run the power line, giving permanent employment to 800 people and creating 9,000 jobs during the construction phase.
Petroleum is a second key energy source that is being processed and used to meet Southern Africa’s needs, and to fuel expanding industries.
Mozambique’s state-owned fuel retailing company, Petromoc, undertook a successful joint venture deal with the South African energy firm Sasol in 2002, thus increasing energy trade between the countries.
“From Mozambique’s point of view, joint ventures offer the capital we need to exploit our growing market of private and industrial petrol consumers. The partners gain ground-level access to this burgeoning market,” said the Mozambican Minister of Energy, Salvador Namburete recently.
Coal is the third leg of the region’s energy infrastructure. Swaziland’s once-thriving mining sector has been reduced to a single coal mine, however production is still good due to increased trade with South Africa.
The region’s energy sectors face the same challenge as other segments of different nations’ economies: how to empower a greater number of previously disenfranchised business people so they might reap the benefits of this lucrative field?
South Africa eased this situation in the mining sector by promulgating the Mineral and Petroleum Resources Development Act in 2002, a development that could be replicated in other SADC member states.
However, if energy trading is going to continue benefiting the region, there is need for a follow-up on international pledges made to finance regional infrastructure projects under the New Partnership for Africa’s Development (NEPAD).
