World's Biggest Dam Drains, Intensifying Zambia Power Crisis

  • Kariba dam water levels have fallen to 21% of capacity
  • Power costs seen causing finance minister `sleepless nights'

Zambia’s power deficit will widen by 42 percent by December as low water levels at the world’s biggest dam hobble hydropower production in the southern African country, Energy Minister Dora Siliya said.

The shortfall will increase to 1,000 megawatts from 700 megawatts now, she told lawmakers Thursday in the capital, Lusaka. The Kariba dam, where Africa’s second-largest copper producer generates almost half of its 2,300 megawatt of total capacity, is running out of water, and output next year will have to be lower than in 2015 or stop altogether, Siliya said.

“The power crisis is real and I think it is high time that everyone in the country understood that we are dealing with an emergency situation,” she said. “The situation is that Kariba is empty, we are at low levels.”

Low prices for the copper that accounts for more than 70 percent of Zambia’s exports, a ballooning budget deficit and the lack of electricity mean the economy may grow at its slowest pace in 17 years in 2015. The kwacha has lost almost half its value against the dollar since January, making it the worst performer out of 155 currencies tracked by Bloomberg.

Kariba was 21 percent full last week, according to the website of the Zambezi River Authority, regulator of the dam that both Zambia and Zimbabwe use for power generation. The water level was 478.5 meters above sea level, three meters higher than the minimum required for operations. Low rainfall is expected again next year, which will exacerbate the situation, said Siliya, who President Edgar Lungu appointed to head the newly created energy ministry in October.

Floating Plant

The authority has cut each country’s water allocation for next year to 10 billion cubic meters, she said. That’s a reduction from the initial 45 billion cubic meters for this year that was later cut to 33 billion cubic meters. Below-normal rainfall has caused the water level to drop, according to Siliya, who disputed claims that Zambia had worsened the situation by overusing its power plant at Kariba.

To mitigate the electricity shortage, Zambia is spending $14.3 million each month to import 148 megawatts from a private producer and has contracted a 200-megawatt floating plant from Karpowership to dock off neighboring Mozambique’s coast, she said.

A 300 megawatt coal-fired plant in the south of the country will be commissioned in June, said Siliya. A new hydropower plant at Lake Itezhi Tezhi will add 120 megawatts by January, she said. The government is also seeking 200 megawatts of emergency power from large diesel generators in the country by next year.

Prices are near 6-year lows

These measures are adding to strain on government’s finances already pressured by a budget deficit that’s forecast to almost double from levels the administration projected for this year. Copper prices near 6-year lows aren’t helping Zambia’s finances either. Altogether, the interventions the government is taking to mitigate the crisis will cost about $1 billion over the next two years, Siliya said.

‘Sleepless Nights’

“We have a huge revenue gap,” she said. “I’m sure the minister of finance is having sleepless nights.”

The kwacha was little changed at 12.5061 per dollar at 7:18 a.m. in Lusaka, having weakened 49 percent this year.

Mining companies can’t continue to buy power at subsidized prices because this isn’t sustainable, said Siliya. The government needs to find a “middle ground” in pricing for the industry that consumes about half of the country’s total power, she said. Zesco, the state-owned power producer, has applied to more than double prices for customers -- except for mines -- and the regulator will make a decision this month.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE