Regulatory review of the electricity market in Zambia: towards crowding-in private sector investment

Abstract

This report provides an analysis of the Zambian electricity sector policies, laws, and regulations in relation to crowding-in private sector participation in developing national electricity infrastructure. The report is part of the United Nations Economic Commission for Africa and RES4Africa Foundation joint program on Regulatory Review of the Electricity Sector in Africa: Towards Crowding-in Private Sector Investment. Zambia has been able to successfully attract private participation in every segment of the electricity market. Nevertheless, the market retains its single-buyer model, dominated by the vertically integrated state-owned utility ZESCO. It owns about 75 percent of generation capacity, as well as the majority of transmission and distribution assets. A peculiarity of Zambia’s electricity market model compared to other African markets is the involvement of two private players in transmission and distribution services, the Copper Belt Energy Company and the North western energy company, both operating network assets in mining provinces. The purpose of this regulatory review is to pinpoint the main strengths and gaps of the policy and regulatory framework currently in force related to private sector participation in the entire electricity market. It further aims to offer concrete recommendations for regulatory improvements and reforms towards attaining a competitive, resilient, and sustainable electricity market.