Southern African Power Pool 2004 annual report

1S O U T H E R N A F R I C A N P O W E R P O O L 2 0 0 4 A N N U A L R E P O R T

VISION AND OBJECTIVES .................................................................................................................................. 2

ORGANOGRAM AND MEMBERS ...................................................................................................................... 3

ABOUT SAPP ........................................................................................................................................................ 4

ACTIVITY AREAS ............................................................................................................................................ 5 - 7

HIGHLIGHTS .................................................................................................................................................... 5 - 6

SAPP EXECUTIVE COMMITTEE .......................................................................................................................... 7

EXECUTIVE COMMITTEE CHAIRMAN’S REPORT ...................................................................................... 8 - 9

REPORT OF THE MANAGEMENT COMMITTEE .................................................................................... 10 - 12

OPERATING SUB-COMMITTEE REPORT ................................................................................................ 13 - 17

PLANNING SUB-COMMITTEE REPORT .................................................................................................. 18 - 20

ENVIRONMENTAL SUB-COMMITTEE REPORT ...................................................................................... 21 - 22

SAPP CO-ORDINATION CENTRE REPORT .............................................................................................. 23 - 26

STATISTICS .................................................................................................................................................. 27 - 31

REPORT OF THE INDEPENDENT AUDITORS .................................................................................................. 32

STATEMENT OF ACCOUNTING POLICIES ...................................................................................................... 33

INCOME STATEMENT ........................................................................................................................................ 34

BALANCE SHEET ................................................................................................................................................ 35

CASH FLOW STATEMENT .................................................................................................................................. 36

NOTES TO THE FINANCIAL STATEMENTS ............................................................................................ 37 - 39

C O N T E N T S

2 S O U T H E R N A F R I C A N P O W E R P O O L 2 0 0 4 A N N U A L R E P O R T

VisionThe Southern African Power Pool will:• Facilitate the development of a competitive electricity market in the SADC region.• Give the end user a choice of electricity supplier.• Ensure that the southern African region is the region of choice for investment by energy

intensive users.• Ensure sustainable energy developments through sound economic, environmental and

social practices.

ObjectivesThe Southern African Power Pool aims to:• Provide a forum for the development of a world class, robust, safe, efficient, reliable and stable

interconnected electrical system in the southern African region.• Co-ordinate and enforce common regional standards of Quality of Supply; measurement and

monitoring of systems performance.• Harmonise relationships between member utilities.• Facilitate the development of regional expertise through training programmes and research.• Increase power accessibility in rural communities.• Implement strategies in support of sustainable development priorities.

V I S I O N A N D O B J E C T I V E S


SAPP Membership

Full Name of Utility Status Abbreviation CountryBotswana Power Corporation OP BPC BotswanaElectricidade de Mocambique OP EDM MozambiqueElectricity Supply Corporation of Malawi NP ESCOM MalawiEmpresa Nacional de Electricidade NP ENE AngolaESKOM OP Eskom South AfricaLesotho Electricity Corporation OP LEC LesothoNAMPOWER OP NamPower NamibiaSociete Nationale d’Electricite OP SNEL Democratic Republic of CongoSwaziland Electricity Board OP SEB SwazilandTanzania Electricity Supply Company Ltd NP TANESCO TanzaniaZESCO Limited OP ZESCO ZambiaZimbabwe Electricity Supply Authority OP ZESA Zimbabwe

OP = Operating Member NP = Non-Operating Member

O R G A N O G R A M A N D M E M B E R S

SADC Directorate ofInfrastructure and Services

Executive Committee

Management Committee

Planning Operating EnvironmentalSub-committee Sub-committee Sub-committee

Co-ordination Centre


• SAPP was created in August 1995 at theSADC summit held in Kempton Park, SouthAfrica, when member governments of SADC(excluding Mauritius) signed an Inter-Governmental Memorandum ofUnderstanding for the formation of anelectricity power pool in the region under thename of the Southern African Power Pool.

• SAPP is governed by four agreements: theInter-Governmental Memorandum ofUnderstanding which enabled theestablishment of SAPP; the Inter-UtilityMemorandum of Understanding, whichestablished SAPP’s basic management andoperating principles; the AgreementBetween Operating Members whichestablished the specific rules of operationand pricing; and the Operating Guidelines,which provide standards and operatingguidelines.

• SAPP has twelve member countriesrepresented by their respective electricpower utilities organised through SADC.

• SAPP has three working committees: theOperating Sub-Committee, the Planning Sub-Committee and the Environmental Sub-Committee under a Management Committeewhich in turn reports to the ExecutiveCommittee.

• SAPP coordinate the planning and operationof the electric power system among memberutilities.

• SAPP provide a forum for regional solutionsto electric energy problems.

• SAPP has established and is operating theShort-Term Energy Market.

A B O U T S A P P

5

H I G H L I G H T S O F T H E S A P P A C T I V I T I E S

S O U T H E R N A F R I C A N P O W E R P O O L 2 0 0 4 A N N U A L R E P O R T

In the year under review, the SAPP concentratedon three activity areas, which are expandingenergy trading between Members, expansion ofthe generation capacity and transmissioninfrastructure, and capacity building.

1. Expansion of energy trading in the SAPPThe bulk of the electricity traded in the SAPP isgoverned by fixed co-operative bilateralagreements. The agreements provide forassurance of security of supply but are notflexible to accommodate varying demandprofiles and varying prices. The pricing ofelectricity depends on the consumption period;peak and off peak. To explore further thebenefits thereof, the sourcing and scheduling ofelectrical energy closer to the time of dispatchwas proposed in SAPP and research has shownthat competitive bidding is one option forsourcing and securing supplies closer to realtime dispatch.

The short-term energy market (STEM),administered by the SAPP Coordination Centre,commenced operation in April 2001 and wasdesigned to mimic a real time dispatch. Themarket permits the participants to trade energyon a day ahead hourly basis. This permits aparticipant to take advantage of the short-termsurplus of the other participants and also toprofit from its own short-term surplus. Aparticipant can also use STEM to cover atemporary shortage that it may be experiencing.

The SAPP is currently developing a competitiveelectricity market for the region. When theregional competitive market is established, themarket will provide price indicators for investorsand other players to participate. This is a betterpricing mechanism for electricity in acompetitive environment. SAPP believes thatthe creation of a spot market in the region wouldoptimise the use of regional resources, enablethe determination of the correct price ofelectricity in the pool and will send signals forinvestments and real time utilization of existing

assets. The market will also enable the demandside to respond to the supply side price signals.

The SAPP managed to secure financial supportfrom NORAD to develop a competitive electricitymarket for the SADC region. The project startedin January 2004 and is expected to be completedin December 2007.

2. Expansion of Generation and Transmissioninfrastructure In 2001, the SAPP developed a twenty-yeargeneration and transmission expansion plan,known as the Pool Plan. The plan showed thebenefits of coordinated planning and costreductions that can be achieved over individualutility expansion plans. The SAPP is now in theprocess of updating the Pool Plan and it is hopedthat the plan would be completed by the middleof 2005.

Individual members of SAPP have identifiedpriority generation projects in their countriesthat are now been promoted for regionalbenefits. These generation projects are meantto help SAPP reverse the diminishing generationsurplus capacity that SAPP is currentlyexperiencing. Details of the generation projectsare given under SAPP Statistics.

SAPP has also identified several transmissionprojects, which have been classified as priorityprojects. These include several interconnectorsthat would improve system reliability and enablethe exchange of energy to improve systemeconomy. These projects are at different stagesof development and include:• Increasing the transfer capacity of the

transmission corridor from Inga hydropowerstation in the DRC to the border with Zambia.

• Connecting Malawi, a non-interconnected country, to the SAPP through Mozambique,

• Preparing feasibility studies for the interconnection of Tanzania through Zambia and if proven the construction of the Zambia-


Tanzania interconnector and the reinforcement of the Tanzanian transmissionsystem, and

• Preparing feasibility studies for theinterconnection of Angola through Namibia.

3. Capacity Building The SAPP organises various trainingprogrammes for members ranging from courses,hands on training, seminars and conferences,workshops and exchange visits. SAPP has beenable to fund some of the training programmes,but most of them have been funded by USAID. Inthe year that has gone by, the followingactivities, funded by USAID, took place:

3.1 Seminars and WorkshopsThe seminars and workshops included thefollowing:• Developing SAPP through Advanced

Electricity Trading, • Workshop on Issues & Options for Rural

Electrification in SAPP Member Countries,• Rural Electrification Planning in SAPP, • Seminar On The Treatment of Ancillary

Services for the Southern Africa Power Pool,and

• A two-day Regional Conference on “EnablingEnvironment for Private Participation in RuralEnergy Service Delivery in the SADC Countries”, and

• Low Cost Power and HIV/AIDS workshop.

3.2 Exchange visitsThe SAPP Executive Committee visited the USAand Norway from 13-20 September 2003. Theobjectives of the visits to the USA and Norwaywere to gain a better understanding of the U.S.energy sector, discuss the participation of theprivate sector in the power market, and gain abetter understanding of the role of the powerpool in the energy sector.

H I G H L I G H T S O F T H E S A P P A C T I V I T I E S


A p r i l 2 0 0 3 t o M a r c h 2 0 0 4

Mr. John Kaluzi Dr. Vicente M. Veloso Dr. Allexon ChiwayaBPC EDM ESCOM (From Jan 2004)

Mr. Edward Nelumba Mr. Thulani Gcabashe Mr. Simon L. MhavilleENE Eskom LEC

Dr. Leake Hangala Mr. Alphonse Muyumba Mr. Themba TselaNamPower SNEL SEB

Mr. Rudy Huysen Mr. Rodnie P. Sisala Dr. Sydney GataTANESCO ZESCO ZESA

S A P P E X E C U T I V E C O M M I T T E E


Dr. Leake HangalaExecutive Committee Chairman 2003/4

The Southern African Power Pool made greatachievements in the reporting period. Thefollowing is a highlight of some of the SAPPactivities that took place during the year under review.

SAPP Electricity DemandMost SAPP utilities recorded a positive growthin electricity demand. The average SAPPdemand growth was about 3%. The growth hasbeen attributed to the positive economic growthrecorded in most member countries and also tothe rural electrification programmes that SAPPmembers are actively involved in their countries.

Concerns on diminishing generation surpluscapacity in the SADC regionThe Executive Committee resolved to approachthe SADC Energy Ministers for support andleadership in reversing the diminishinggeneration surplus capacity in the SADC region.The Committee noted that in the last ten years,the power demand in the SADC region has beenincreasing at a rate of about three percent perannum. Unfortunately, there has not been acorresponding increment of investment inpower generation during the same period. As aresult, the generation surplus capacity has beendiminishing steadily. The continued diminishinggeneration surplus capacity in the SADC regionwould have a negative impact on the economiesof the region and potential investors would be frightened. SAPP members have identifiedgeneration projects in their countries, which if

developed would increase generation capacityin the short and long-term for the region. Theseprojects have received support from the SADCHeads of State.

The SAPP Power Market ProjectThe World Bank approved the SAPP PowerMarket Project in November 2003 andunanimously agreed to two credits of USD177.5million for the Democratic Republic of Congo(DRC), and USD1.1 million for Zambia. The totalIDA financing that was approved was USD178.6million to SAPP for Phase-I of the SAPP PowerMarket Project.

SAPP also secured NOK35 million (about USD5million) grant from NORAD for the developmentof a regional competitive electricity market anda further SEK10 million (about USD1.4 million)from Sida for the development of the Long-TermPricing policy, implementation of proceduresand Ancillary Services Market as part of theSouthern Africa Power Market Project.

SAPP InterconnectorsThe SAPP priority Interconnectors; the DRC-Zambia, the Mozambique-Malawi and theZambia-Tanzania Interconnectors are nowcovered under Phase-I of the SAPP powermarket project. The World Bank grant to the DRCis for the strengthening of the transmissioncorridor from Inga to SAPP, and the grant toZambia is for a feasibility study of thetransmission line from Zambia to Tanzania.

The Mozambique-Malawi interconnectorprogressed slower than anticipated, but hasnow reached a stage whereby the line routesurvey is going to be carried out. This will pavethe way for the World Bank funding to constructthe interconnector.

The Short-Term Energy Market (STEM)There was a modest increase in the volume of

E X E C U T I V E C O M M I T T E E C H A I R M A N ’ S R E P O R T


STEM. The market developed from a largely offpeak market into a twenty-four hour marketwhere both hydro and thermal sellers offerenergy at the appropriate time of day.

SAPP Telecommunications projectThe Executive Committee agreed to implementthe SAPP telecommunications project. Theproject would be funded internally by SAPPthrough an equal cost sharing method betweenOperating Members. The project is expected tobe implemented before the end of the year 2004.It is hoped that communication betweenmembers would improve greatly.

Visit to the USA and Norway

Dr. Vicente Veloso, Executive Committee Vice-Chairperson (Team Leader), Mr. Pat Naidoo(Eskom) and Ms. Claire Limbwambwa (ZESCO) inWashington DC during the Executive Committeevisit to the USA.

The SAPP Executive Committee visited the USAand Norway from the 13-20 September 2003. Inthe USA, the Committee visited the FederalEnergy Regulatory Commission (FERC),Constellation Energy Source and PJMInterconnections. In Norway, the Committeevisited Nord Pool. The visits were successful andgave a lot of insight to the Executive Committeeon the operations of other power pools in theworld. A follow-up to the Executive Committeevisit to the USA and Norway was held in form ofa workshop in Tanzania in April 2004.

AcknowledgmentsThe Executive Committee would like to take thisopportunity to thank the donor community andparticularly the World Bank, USAID, NORAD andSida for their assistance and support renderedto SAPP at a crucial time when SAPP istransforming herself from a cooperative pool toa competitive pool.

I also wish to thank SAPP members for theircontinued support to me as Chairperson of theExecutive Committee. May I take thisopportunity and thank you once again for re-electing me Chairperson of the SAPP ExecutiveCommittee starting from April 2004.Congratulations also go to Dr. Vicente Velosowho was re-elected Vice Chairperson.

SAPP would also want to congratulate Dr.Allexon Chiwaya who was appointed ChiefExecutive Officer of ESCOM Malawi inDecember 2003.

The focus for the SAPP Executive Committee forthe New Year would be to encourage investmentin the regional generation projects. This wouldensure that SAPP does not run out of generationsurplus capacity in the coming years.

Dr. Leake HangalaChairperson, SAPP Executive Committee

E X E C U T I V E C O M M I T T E E C H A I R M A N ’ S R E P O R T - c o n t .


Mr. Bertholdt Mbuere ua MbuereManagement Committee Chairperson (2002-2004)

During the year that has gone by, the SAPPManagement Committee was mandated by theExecutive Committee to come up withrecommendations on SAPP governance, SAPPstructure and membership criteria,documentation review and the SAPP reportingprotocol to the Integrated Council of Ministers.The Management Committee completed thesetasks successfully.

The Management Committee went on to refinethe SAPP vision and objectives in an attempt toinclude statements concerning the environment.The other focus for the Management Committeewas the formulation and development of theSAPP Business Plan to market the SAPPprojects and to unveil business opportunities toinvestors in the SADC power sector.

SAPP Governance, Structure and MembershipDuring the reporting period, the ExecutiveCommittee approved the ManagementCommittee’s proposal on SAPP governance andstructure. The Management Committee came upwith a new governance and structure for SAPPthat takes cognisance of the reforms takingplace in SAPP member countries and thechanges taking place in the region’s ElectricitySupply Industry.

The governance and membership of theSouthern African Power Pool was derived fromthe desire for economic co-operation, equitablesharing of resources and support of one anotherin times of crisis under the SADC protocol. The environment under which the power poolnow operates has significantly changedwarranting a review of the SAPP governanceand membership.

The new SAPP structure proposes to introducea separate sub-committee, the Markets Sub-Committee, to be responsible for thedevelopment of the competitive electricitymarket in the SADC region. The Markets Sub-Committee would also report to the SAPPManagement Committee just like the other threecommittees, the Operating, Planning andEnvironmental Sub-Committees.

In the new structure, a Coordination CentreBoard would be introduced. The SAPPCoordination Centre would report to theCoordination Centre Board, which in turn wouldreport directly to the Management Committee.The Management Committee will continue toreport to the Executive Committee as in theprevious structure.

Documentation ReviewThe Executive Committee accepted the requestby the Management Committee to review theSAPP documents to reflect the proposedchanges in the SAPP governance and structure.After the Executive Committee had accepted thenew SAPP governance and structure, theManagement Committee proceeded to reviewthe Inter-Governmental MOU and the Inter-

R E P O R T O F T H E M A N A G E M E N T C O M M I T T E E


Utility MOU. The Executive Committee approvedthe revised Inter-Governmental MOU and thenrecommended that the revised Inter-Governmental MOU be taken to the IntegratedCouncil of Ministers for consideration.

SAPP Reporting Protocol to the SADCThe review of SAPP governance and structurefollowed a restructuring in the SADC, which tookplace earlier. As a result, a new reportingstructure now exists in the SADC energy sector.The Committee of Energy Ministers, theCommittee of Senior Energy Officers, theElectricity Sub-Committee and the SADC EnergyCommission no longer exist. Instead there is nowan Integrated Committee of Ministers, aCommittee of Senior Officers and the Directorateof Infrastructure and Services (DIS) under whichis the Energy Sector. SAPP has been directed toreport to the Energy Sector in the DIS.

The SAPP Business Plan The Management Committee launched a five-year SAPP business plan highlighting thedetailed activities, generation and transmissionprojects that needed to be promoted for thebenefit of the SAPP. The document would beused as a marketing tool for the SAPP projects.

SAPP Vision and ObjectivesThe Management Committee reviewed theSAPP vision and objectives to includestatements concerning the environment. TheSAPP vision was extended to include thefollowing statement:

“Ensure sustainable energy developmentsthrough sound economic, environmental andsocial practices.”

Similarly, another statement was added to theSAPP objectives as follows:

“Implement strategies in support of sustainabledevelopment priorities.”

AcknowledgmentsI would like to thank members of theManagement Committee for showingconfidence in my leadership by electing me for asecond time in office starting from August 2003to August 2004.

I would also like to take this opportunity andcongratulate the following ManagementCommittee members who were promoted tohigher responsibilities in their utilities as follows.

Mr. Luke Mswane of Swaziland Electricity Board(SEB) was appointed Executive Manager in theManaging Director’s office in October 2003.

Mr Luke MswaneExecutive Manager in the MD’s Office, SEB

Mr. Edward Rugoyi was appointed ManagingDirector for the newly created ZimbabweTransmission Power Company. The other twoappointed within the same company were, MrPaddy Claypole as Director for Energy Tradingand System Operations and Mr. Stephen Dihwaas Business Development Director.

R E P O R T O F T H E M A N A G E M E N T C O M M I T T E E - c o n t .


Mr. Edward RugoyiManaging Director, Zimbabwe TransmissionPower Company

Lastly, I would like to thank NamPower forappointing me to the position of GeneralManager (Transmission) in December 2003.

The focus for the SAPP Management Committeefor the New Year would be to manage thedevelopment of a competitive electricity marketfor the SADC region. This would be achallenging task for the SAPP as the memberutilities are undergoing a reform process at thesame time.

Mr. Bertholdt Mbuere ua MbuereSAPP Management Committee Chairperson

R E P O R T O F T H E M A N A G E M E N T C O M M I T T E E - c o n t .


Mrs Erica Johnson of Eskom, South AfricaOperating Sub-Committee Chairperson (2003/4)

The main focus for the SAPP Operating Sub-Committee in the year under review werecontinuous improvement in technical operations,infrastructure development, documentation,trading and capacity building.

The current challenge for the committee is howto develop the market beyond the short-termenergy market (STEM). The future challenge isthe generation reserve capacity that is decliningin the region and the transmission transfer limitsbeing reached within utilities.

In the year under review, the SAPP OperatingSub-Committee made a number of achievementsand the notable ones were as follows.

1 The Short Term Energy MarketThere was a modest increase in the volume ofSTEM. The market developed from a largely offpeak market into a twenty-four hour marketwhere both hydro and thermal sellers offerenergy at the appropriate time of day.

The eight participants in the STEM are BPC ofBotswana, Eskom of South Africa, HCB and EDMof Mozambique, KNBC of Zambia, NamPower ofNamibia, SEB of Swaziland and ZESA ofZimbabwe.

A review of the STEM results and operationswas carried out at the end of December 2003and the following observations were noted:

• LEC of Lesotho and SNEL of the DRC are theonly SAPP Operating Members notparticipating in the STEM.

• In terms of supply and demand, there was aconsiderable increase in demand from2.9TWh in 2002 to 4.2TWh in 2003. The supplyresponded to the demand and increasedfrom 2.6TWh in 2002 and 3.0TWh in 2003,Figure-1.

Fig.1: Energy supply and demand (2001 to 2003)

• In the year 2002, the energy traded on theSTEM was 740-GWh at a cost ofapproximately USD2.9 million. Thecorresponding figures for the year 2003 were720-GWh at USD3.6 million, respectively.

• The yearly average price of energyincreased from 0.39USc/kWh in 2002 to0.50USc/kWh in 2003. In 2003, the average

O P E R A T I N G S U B - C O M M I T T E E R E P O R T

4500

4000

3500

3000

2500

2000

1500

1000

500

0 Year 2001 2002 2003

Supply Demand


montly maximum prices ranged from0.50Usc/kWh to 0.75USc/kWh.

Fig.2: Energy & volume traded on STEM (2001-2003)

• The STEM monthly sales were lowest inSeptember and October of 2003, but pickedup in November of 2003, Figure-3. The monthsof September and October are usually thehottest months in Southern African and thepower consumption during the period islower than in the other months. The hotweather is reflected as a drop in STEM sales.

Fig.3: STEM Monthly Sales for the year 2003

2 System Operations2.1 Inadvertent Energy Management A procedure for the computation andmanagement of inadvertent energy in SAPP wasput in place at the Co-ordination Centre duringthe month of August 2003. Following theapproval of the procedure and the computationmethod, the Co-ordination Centre reconciled allthe inadvertent energy up to the end ofDecember 2001.

A document to explain the inadvertentinterchange accounting was developed and hasbeen adopted. Included within the document arethe accounting practices that every control areawithin the SAPP will be expected to follow.These practices provide a method for isolatingand eliminating the source(s) of accountingerrors. They may also be used as an aid inidentifying the poor control performance thatcontributes to inadvertent accumulations.

2.2 System disturbances During the period from August 2003 to May 2004,there were eleven system disturbances on theSAPP network reported to the CoordinationCentre. The staff of the Coordination Centreanalyses each disturbance to determine thecause or causes of the event and evaluatevarious remedial actions that could be possible.The Coordination Centre staff discusses eachsystem disturbance with the utility engineersinvolved in the event with the objective todevelop remedial action that will reduce theprobability of future disturbances. This providesan independent review of the systemdisturbance with the objective to increase thereliability of the region’s power system.

O P E R A T I N G S U B - C O M M I T T E E R E P O R T - c o n t .

4000

3500

300

2500

2000

1500

1000

500

0 Year 2001 2002 2003

Energy in GWh Volume in USD ‘OOO

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

4000

3500

3000

2500

2000

1500

1000

500

0

STEM Monthly Sales for 2003 in MWh


2.3 Transfer limit of the north-south (ZESA-BPC-Eskom) Interconnector The congestion on the Insukamini-Phokoje-Matimba 400kV line was reduced fromNovember 2003, when BPC declared newtransfer limits to the Co-ordination Centrefollowing the commissioning and eventualcommercial availability of a third 220/132kV (125MVA) transformer at the BPC SegoditshaneSubstation. BPC had evaluated the study reportsassociated with the changed systemconfiguration and advised that the new transferlimits through BPC would now be 500MW northto south and 650MW south to north. Theprinciples in the tripartite agreement "BPC-Eskom-ZESA Agreement on the Use of thePhokoje-Insukamini and Phokoje-Matimba400kV Interconnectors' would apply until areview of the agreement is carried out. As aresult of the new transfer limits through the BPCnetwork, energy trading on the STEM isexpected to increase.

3 Working Group ReportsMarkets Development Working Group The first meeting of the Markets DevelopmentWorking Group (MDWG) took place in Harare on24 November 2003. The SAPP Operating Sub-Committee established the MDWG whoseprimary function is to produce a RegionalElectricity Market Development Plan andsubsequently implement it after the approval ofthe Management Committee. At this meeting,the Terms of Reference for the MDWG werefinalised and agreed to by members. The MDWGis also responsible for the supervision of theSAPP consultant, Nord Pool Consulting AS, that has been contracted by SAPP to help

develop a competitive electricity market for theSADC region.

4 Financial & Technical Cooperation4.1 The Coordination Centre Budget 2003/4The Coordination Centre was allocatedUSD250,000 for the fiscal year starting from April2003 to March 2004. SAPP members were billedthe amount according to the agreed allocation inthe Agreement Between Operating Members.

4.2 The World BankThe World Bank has been helping SAPP tomobilise funds for the SAPP Power Marketproject. SAPP and the World Bank agreed thatthe SAPP Power Market Project would bedeveloped in three phases. Phase-I of theproject comprise:

• The upgrade of the facilities at the SAPPCoordination Centre in Harare,

• The feasibility study of the transmission linefrom Zambia to Tanzania, and

• The strengthening of the transmissioncorridor from Inga in the DemocraticRepublic of Congo (DRC) to SAPP.

On 11 November 2003, the Board of ExecutiveDirectors at the World Bank approved the SAPPPower Market Project and unanimously agreedto two credits, USD 177.5 Million for the DRC,and USD1.1 million for Zambia. The total IDAfinancing was USD178.6 million to SAPP forPhase-I of the SAPP Power Market Project.

Phase-II will incorporate the Malawi-Mozambique interconnector. The work inMalawi and Mozambique includes construction



of a 220kV transmission line of about 219-km inlength from Tete in Mozambique to north ofBlantyre (Phombeya) in Malawi, andconstruction and extension of relatedsubstations in the two countries. A modificationto the power system Control Centre inMozambique is also envisaged. The cost of thiswould be about USD87 million of which IDAwould provide USD62 million. NORAD and thetwo respective project Governments wouldfinance the remainder.

Still under Phase-II is the additionalstrengthening of the transmission corridor fromInga to the SAPP at 330kV. The cost of this wouldbe about USD42 million of which IDA wouldprovide USD40 million and the ZambianGovernment the remainder. The financing of thepart of this transmission corridor in Zambiawould be arranged by the national power utility,ZESCO, which has already approached DBSAfor support. The total IDA financing for thesecond phase would be USD104 million.

Phase-III will cover the construction of theZambia-Tanzania interconnector if the feasibilityis proven by the study financed in the Phase-I.

4.3 SAPP- NORAD CooperationNORAD gave SAPP NOK35 million (Thirty FiveMillion Norwegian Kroner) grant for thedevelopment of a competitive electricity marketfor the SADC region covering the period fromJanuary 2004 to December 2007. The projectofficially started from the 15th of January 2004

The goal of the project is to provide a least cost,environmentally friendly and affordable energy

to the SADC nationals, and to increase theaccessibility for rural areas in Southern Africathrough the development of a competitiveelectricity market.

The objectives of the project are to develop aspot market in the SADC region and help totransform the SAPP from a cooperative pool intoa competitive pool. The market-clearing pricethat comes from a competitive electricity marketwould be used as a reference price forelectricity in the region. This would encourageinvestors and the private sector to invest in theregion where the price of electricity can befollowed and predicted competitively by themarket.

4.4 SAPP-USAID CooperationUSAID continued to support SAPP in trainingand capacity building activities. USAIDsponsored the Executive Committee visit to theUSA and Norway and also pledged continuedsupport to SAPP in the following activities:

• Sponsorship of the Management Committeeto review the SAPP documents and SAPPmembership,

• Sponsorship of the Operating Sub-Committeeto continue to develop the SAPP competitivepower market,

• Capacity building and training of SAPPmembers. The SAPP Executive Committeeheld a workshop in Tanzania on competitivepower markets. The workshop wassponsored by USAID.

• The installation and implementation of theQuality of Supply database at theCoordination Centre,



• Production of the SAPP Business Plan, and • Marketing of the STEM.

The SAPP Co-ordination Centre launched a newwebsite on the 24 October 2003. The site addressremained the same "http://www.sapp.co.zw" The cost for the website were met by USAID.

4.6 SAPP- Sida CooperationSida gave a grant to SAPP amounting to SEK10million (Ten Million Swedish Kroner) for thedevelopment of the long-Term Transmissionpricing policy and implementation procedures,and for the development of the AncillaryServices Market as part of the Southern AfricaPower Market Project. This project is expectedto start officially on the 1 July 2004.

I would like to thank the Operating Sub-Committee members for electing meChairperson of the Committee. I would also liketo take this opportunity and thank the outgoingChairperson, Mr, Pius Gumbi, for the good workhe did as Chairperson of the OSC from August2001 to August 2003.

Ms Erica JohnsonChairperson of the Operating Sub-Committee



Mrs Angela Dava of EDM (Mozambique)Planning Sub-Committee Chairperson

1. IntroductionThe PSC continues to play an active role infulfilling the objectives of SAPP. The PSCnominated Mrs. Angela Dava as theChairperson becoming the first lady to beChairperson of the PSC since inception.

2. Load Diversity StudyA load diversity study was carried out bythe Generation Planning Working Group forthe years 2001 and 2002. Six utilitiesprovided the required chronological hourlyload data. The study demonstrated thatthere is practically no load diversity inSAPP. The graph below shows the hourlyload profiles for some countries for theSAPP peak load week of 2002 and theoverall SAPP weekly load profile.

Graph 1: SAPP Load diversity (All utilitiesloads normalised to their annual peak load)

3. SAPP Project Tracking SAPP has carried out a long-termgeneration and transmission planningstudy in 2001. The integrated resourceplanning study revealed that SAPP wouldrun out of capacity in the year 2007.

Graph 2: SAPP Generation vs SAPP LoadForecast

New generation projects have to becommissioned to meet the increasingdemand and generation projects such asMepanda Uncua in Mozambique andGrand Inga in DRC are seen under SAPP asbeing among the priority projects to meetthe diminishing of the generation capacity.The graph below shows the anticipatedSAPP demand growth and the SAPPcapacity plan to meet the required overallreserve requirements. The sharp rise in thedemand forecast in the year 2012 is due tothe expected export of power from the DRCto countries in the North outside SAPP. Thismay be realised if the Grand Ingahydropower project in the DRC iscommissioned. Table 4 and 5 shows thefuture generation projects in SAPPcountries.

4. Ancillary Services Market DevelopmentThe Ancillary Services Working Groupproduced the first draft report covering thelist of ancillary services to be considered

P L A N N I N G S U B - C O M M I T T E E R E P O R T 2 0 0 3 / 4

1 25 49 73 97 121 145HOUR

POOL BPC

ESKOM ESCOM

NAMP TANESCO

PEAK WEEK

1.0000

0.9000

0.8000

0.7000

0.6000

0.5000

0.4000

0.3000

0.2000

60000

55000

50000

45000

40000

35000

30000

Effective Peak DemandCapacity after DSM

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


Graph 3: SAPP demand supply balance

in SAPP. The definitions, criteria andrequirements were prepared. Some of theservices identified include:

• Scheduling, System Control and Dispatch • Reactive Power Supply and Voltage Control• Regulation and Load Following• Operating Reserves• Black Start and Unit Islanding• Constrained Generation• Energy imbalance (Inadvertent energy)

5. SAPP Dynamic Stability Studies TrainingThe second PSS/E Advanced course tookplace in Johannesburg, South Africa inJune 2003. Fourteen SAPP membersattended the course. ESCOM TransmissionPlanners underwent a skills transferprogram at the Coordination Centre ondynamic modeling.

6. Transmission InterconnectionsThe SAPP Pool Plan Transmission Projectscan be summarised as follows:

• HVDC Transmission link (DRC - Angola -Namibia - Botswana - South Africa) - 3500 MW

• 2x500kV DC Inga-Kolwezi (DRC) - up to 1,000 MW

• 2 x 330 kV line Luano - Karavia (300km)(DRC - Zambia) - approximately 600 MW

• 400 kV Matimba - Phokoje - Insukamini -(Zimbabwe - Botswana - South Africa) -approximately 500 MW

• ZESA - BPC new line (Zimbabwe - Botswana)- up to 650 MW

• Matambo - Pombeya 400kV - (Mozambique- Malawi) - 100 MW

The details of the projects are given understatistics:

6.1 WESTCOR• The governments of Angola, Botswana,

DRC, Namibia and South Africa are yet tosign a Memorandum of Understanding.

• It was noted that HVDC is the preferredoptimum technology and research is beingundertaken for 750 – 800 kV HVDC. Up to3500 MW would be transmitted over adistance of 3000 km.

• A Project Office being setup in Gaborone,Botswana

• Some preliminary load flow and fault levelstudies were done.

• A workshop on HVDC Technology was heldin March 2004 in South Africa.

6.2 DRC – Zambia• Terminal equipment upgrade at Luano in

Zambia was completed. This would allowfor the increase in transfer capacity from210 MW to 260 MW.

• Other upgrade works to be done toincrease the transfer capacity to 320 MW.

• The upgrades in the DRC would be fundedby the World Bank while the work inZambia would be funded by the CopperbeltEnergy Corporation (CEC)

• SNEL negotiated short term and medium termsupply agreements with ZESA and ESKOM.

P L A N N I N G S U B - C O M M I T T E E R E P O R T 2 0 0 3 / 4 - c o n t .

SAPP Plan70000

65000

60000

55000

50000

45000

40000

35000

30000

Capacity Capacity Peak DemandPlanned Required after DSM

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


6.3 Mozambique Malawi• Envisages the construction of 220km of 400

kV transmission line and a new substationat Phombeya in Malawi. The line wouldinitially be operated at 220 kV transmissionvoltage.

• The Power Purchase Agreement is at anadvanced stage of finalisation between thesupplier HCB and the buyer ESCOM.

• Invitations for bids were floated for theaerial line route survey.

• Some of the project components includeupgrade of the SCADA and communicationsystems, under frequency load sheddingsystems, engineering services etc.

6.4 Zambia – Tanzania – Kenya• The World Bank awarded USD 1.1 million

for the feasibility studies which covers theZambia – Tanzania portion of theinterconnector.

• Phase I which covers the engineering andfinancial studies between Zambia andTanzania were completed.

• Phase II is the finalisation of the PowerPurchase Agreement and relateddocumentation

• The governments of Zambia And Tanzaniahave already signed the Memorandum ofUnderstanding and are expecting Kenya tosign.

• A project development plan is already inplace for the Pensulo (Zambia) to Singida(Tanzania) for a double circuit 330 kV 450km transmission line.

• Tanzania plans to import initially 200 MW ofpower

7. Restructuring in SAPPThe SAPP countries are at different levelsof restructuring as shown in the tablebelow.

Mrs Angela DavaChairperson of the Planning Sub-Committee

P L A N N I N G S U B - C O M M I T T E E R E P O R T 2 0 0 3 / 4 - c o n t .

New Legal Framework IS IM IM IM IM IMUnbundling & IPPs IS IS IP IP IPPrivate Sector participation IP IP IMThird Party AccessNew Regulatory Framework IM IM IM IS IM IPReorganising of distribution IS IS IP IS ISTariff Reform IS ISUtility Commercialisation AS AS AS AS AS AS IS IS IS IS IS IS

Restructuring in SAPP utilities

Key: IM, Implemented IP, In progress AS, Advanced stage IS,Initial stage

Zimbabw

e

Zambia

Tanzania

Swaziland

South Africa

Nam

ibia

Mozam

bique

Malaw

i

Lesotho

DRC

Botswana

Angola

SAPP Member Countries

Power Sector Reform Activities


Mr. Lovemore Nyahuma of ZESA EnvironmentalSub-Committee Chairperson (2003/4)

A lot of groundwork was covered duringthe year under review and the notableachievements are detailed below.

1. Evaluation of Environmental Impacts ofSAPP Interconnections

1.1 WESTCORThe overall framework of theEnvironmental Impact Assessment Study(EIA) was submitted to the TechnicalCommittee.

1.2 DRC-ZambiaConstruction of the 330kV line commencedin January 2004. The EnvironmentalManagement Plan (EMP) was forwarded tothe contractor and the environmentalcoordinator has been appointed to overseeimplementation of environmental issues asper EMP.

The Environmental Council of Zambia (ECZ)approved the Environmental ImpactAssessment study (EIA) for the 220kV line.Construction is to begin in May 2004 whenfunds are available. Independentconsultants through funds provided by theWorld Bank carried out the EIA studycovering the DRC.

1.3 Zambia-Tanzania-KenyaThe EIAs were completed in all the threecountries.

1.4 Mozambique-MalawiESCOM of Malawi was awaiting finalapproval of the EIA study from the Ministryof Environment. EdM of Mozambiqueexpected the EIA study to be completed bythe beginning of April 2004.

2. Working Group Activities

2.1 Sustainable DevelopmentIn keeping with developments the worldover the sub-committee made the additionslisted below.

Addition to the VisionEnsure sustainable energy developmentsthrough sound economic, environmentaland social practices.

Addition to the ObjectivesImplement strategies in support ofsustainable development priorities.

2.2 SAPP Policy on Climate ChangeThe Environmental Sub-Committeeadopted the policy paper. It was to besubmitted to the Management Committeefor approval.

2.3 Negative Impacts on Climate ChangeThe draft report on the negative impacts ofclimate change was to be submitted to theEnvironmental Sub-Committee forcomments.

E N V I R O N M E N T A L S U B - C O M M I T T E E R E P O R T


2.4 Guidelines on Management of Oil SpillsThe draft document was completed andwas to be commented on after which it wasto be submitted to the ManagementCommittee for approval.

2.5 Guidelines on Management of AsbestosThe draft document was to be commentedon after which it was to be submitted to theManagement Committee for approval.

2.6 Guidelines on Animal InteractionsThe guidelines were circulated forcomments.

2.7 TrainingThere were two training sessions duringthe course of the year. The first one was on

animal interaction with electricityinfrastructure and the other onEnvironmental Auditing.

Mr. Lovemore NyahumaChairman of the Environmental Sub-Committee

E N V I R O N M E N T A L S U B - C O M M I T T E E R E P O R T - c o n t .


S A P P C O - O R D I N A T I O N C E N T R E R E P O R T

Dr. Lawrence Musaba Mr. Alison ChikovaThe Coordination Centre Manager Supervisor, System Studies

Mrs. Joyce Mutsau Mr. Chatwel NcubeFinance and Administration Officer IT Specialist

Mr. Elisha Mutambudzi Ms. Daisy MudangweSTEM Finance Officer STEM Finance Officer

Mr Misheck Mr. William BaletTembo SAPP Senior Advisor


1. Introduction The Coordination Centre continues to bethe driver and centre of most of theactivities in SAPP. In the year under review,the Coordination Centre was responsiblefor the coordination of the SAPP PowerMarket Project, SAPP membership anddocumentation review, competitiveelectricity market development, ancillaryservices market development,development of the SAPP Business Plan,and many other activities.

2 Human Resources2.1 New members of staff

During the year, the SAPP ComputerAnalyst Mr. Frank Chirumbwana left the Co-ordination Centre and was replaced by Mr.Chatwel Ncube, a holder of Bachelor ofEngineering Honours Degree from theNational University of Science andTechnology (NUST) in Bulawayo,Zimbabwe. Mr. Ncube was employed inAugust 2003 and started work on 8September 2003.

The STEM Finance Officer Ms. MoiraChisvo left the Coordination Centre tofurther her studies in the USA. Ms. DaisyMudangwe who is a graduate of NUSTreplaced Ms. Moira Chisvo. Ms Mudangweholds a bachelor of Commerce Honoursdegree in Accounting. Ms. Mudangwe wasemployed in October 2003 and started workin November 2003.

2.2 Staff TrainingThe Co-ordination Centre continues topromote staff development programs andthe staff attended different courses in theirareas of specialisation. The CoordinationCentre is committed to organisationaldevelopment. Other members of staff havebeen doing part-time studies with variousinstitutions within and outside ofZimbabwe. The Co-ordination Centre

System Studies Supervisor, Mr. AlisonChikova, attended two modules of theManagement Development Program withthe Zimbabwe Institute of Management ofone-week duration each.

2.3 Organisational StructureThe Co-ordination Centre Board approvedthe new Co-ordination Centre organisationstructure. A document describing the jobdescriptions for each position togetherwith the minimum skills and qualificationrequirements, were developed by the Co-ordination Centre Manager and circulatedto all Co-ordination Centre Board members.

The implementation of the new structurewould go through the normal SAPPapproval process from the Co-ordinationCentre Board via the ManagementCommittee to the Executive Committee.

3. STEM Market Improvements During the year a lot of improvements havebeen made in automating the STEMprocess. These improvements haveallowed employees to focus on otherfinancial activities. Internet based tradinghas also been introduced where utilitiessubmit their offers and bids via the websitereducing on human intervention from theCoordination Centre thereby reducingerrors. Work is still on going to automatethe STEM invoicing.

4. The SAPP Business PlanA five-year SAPP business plan wasdeveloped by the Coordination Centre withthe aim to highlight areas and projects thatneeded external support and funding. Amarketing brochure was also produced forthe investors to easily access theinformation and the details of the projects.USAID provided financial assistance in thedevelopment of the brochure.

S A P P C O - O R D I N A T I O N C E N T R E R E P O R T - c o n t .


5. Other Activities 5.1 Mediation in the use of the HVDC line

The Coordination Centre organised ameeting in Harare on 1 October 2003between EdM and HCB of Mozambique andEskom of South Africa. The meetingdiscussed the use of the HVDC line fromMozambique to South Africa. The followingrecommendations were made on the use ofthe HVDC line:

• HCB and Eskom would need to have thereliability premium issue solved before theycould move forward and allow other thirdparties to use the line as the whole problemrevolves around this.

• HCB and Eskom should review the bilateralagreement on the use of the line and themetering and billing arrangements. HCBand Eskom should revert to the use ofscheduled energy for billing rather than theactual flows.

5.2 WAPP Visit to the Coordination CentreThe West African Power Pool (WAPP)representatives of the institutional andtechnical working groups participated in asemi-annual meeting of the SAPP inGaborone, Botswana, in February 2004. Thegroup then visited the SAPP Co-ordinationCentre in Harare, Zimbabwe, to familiarisethemselves with the operations of SAPP.

The SAPP was also host to Mr. Bruno K.Kalala from the Central African Power Pool(CAPP). Mr. Kalala is the person manningthe CAPP offices in Brazzaville, Republic ofCongo. Mr. Kalala had the same agenda asofficials from WAPP.

5.3 Conferences and WorkshopsPresentation in IndiaOn 1 October 2003, Mr. William Balet, theSAPP Senior Advisor, made a presentationto the National Thermal Power Company

(NTPC) of India, in New Delhi, on SAPP andhow STEM has introduced marketprinciples and electricity trading into theSADC region. Considerable interest wasshown in SAPP and STEM in particular.

ZESCO also shared Southern Africantransmission practices with the SARI/ETransmission Partnership in New Delhi,India on October 15-17, 2003.

Africa Hydro 2003 ConferenceThe Africa Hydro 2003 Conference washeld in Arusha, Tanzania, from 17-19November 2003. The conference wasorganised by the International Centre forHydropower (ICH) of Norway and theTanzania Electric Supply Company Limited(TANESCO). The SAPP Senior Advisor, Mr.William Balet, again represented theCoordination Centre.

Power Generation Africa 2004 ConferenceA two-days Power Generation Africa 2004conference was held in Midrand, SouthAfrica, from the 16-17 March 2004. Theconference was intended to address theissues on funding and financing of theAfrican power sector, privatisation,infrastructure development and renewableenergy sources.

Dr. L. Musaba, the Coordination CentreManager and Mr. B. Mbuere, theManagement Committee Chairpersonrepresented SAPP. The two togetherpresented a paper entitled, Meeting theElectricity Demands of the Majority of theAfrican Continent via the Inga Site on theCongo River.

Conference on Enabling Environment forPrivate Participation in Rural EnergyService DeliveryA two-days USAID sponsored conferenceon Regional Conference on Enabling



Environment for Private Participation inRural Energy Service Delivery in the SADCCountries was held in Windhoek, Namibia,from the 15-16 April 2004.

The conference focused on discussions onthe best practices in institutional, business,and financial models for rural energyservice delivery and the role variousparties can play in developing an enablingenvironment for private sectorparticipation in both the financing andmanagement of rural energy servicedelivery.

Dr. L. Musaba, the Manager, and Mr. A.Chikova, Supervisor System Studies,represented the Coordination Centre.

Dr. Lawrence MusabaSAPP Coordination Centre Manager



TABL

E 1

UTILI

TY G

ENER

AL IN

FORM

ATIO

NAP

RIL 2

003 M

ARCH

2004

Coun

tryUt

ility

Instal

ledMa

ximum

MD

Sales

Sa

les

Numb

er of

Numb

er of

Gene

ration

Net

Net

Transm

ission

Reve

nue

Debto

rRa

te of

Net

Capa

city

Dema

nd

Grow

thGr

owth

Custo

mers

Emplo

yees

Sent

Out

Impo

rtsEx

ports

Syste

m US

$Da

ysRe

turn

Incom

e

losse

sUS

D

MWMW

%GW

h%

GWh

GWh

GWh

%Mi

llion

%Mi

llion

Ango

laEN

E62

431

75.7

1,542

14,1

119,3

923,2

911,9

9311

.16-

2638

45n/

an/

a

Botsw

ana

BPC

132

393

9.221

5010

108,9

852,0

8693

61,6

06-

11.7

110.9

42.1

7.645

.3

Leso

tho

LEC

7290

1.131

6-3

.642

,390

454

429

838

20.8

18.9

38-0

.06-3

.8

Mala

wiES

COM

285

227

797

04

135,0

002,4

001,1

77N/

AN/

A19

5.319

110

12.2

2

Moz

ambiq

ueED

M17

727

33

1,099

4.124

5,859

2,662

261

1,042

245,6

2076

,210

50.0

224

62.08

Nami

biaNa

mPow

er39

337

16.6

2,246

5.13,2

6581

81,4

211,0

45

- 8

112

341.2

111

Sout

h Afri

caES

KOM

42,01

131

,928

119

6,980

4.83,5

05,03

928

,938

210,2

188,1

949,9

778.3

4,782

2710

.5848

7

Swaz

iland

SEB

5117

1.57

831.6

1345

,300

724

991.2

868.2

-16

.146

.3382

35.8

Tanz

ania

TANE

SCO

591

506

6.52,6

251

485,6

6142

9633

6553

- 22

n/a

n/a

n/a

n/a

DRC

SNEL

2,442

991

04,3

810.4

301,4

785,4

625,9

07-

1,350

5.645

.3n/

an/

an/

a

Zamb

iaZE

SCO

1,642

1,255

8.87,8

524.9

310,0

003,6

178,4

66-

206

2.814

9.14

180

216

.9

Zimba

bwe

ZESA

1,990

2,007

-110

,561

1.02

540,7

386,0

208,7

993,1

38-

11.5

175

70-2

3.7-1

10

S T A T I S T I C S


TABLE 2 ANNUAL M

AXIMUM

DEMAND, M

W

HISTORICFORECAST

YEAR 1998

19992000

20012002

20032004

20052006

20072008

20092010

2011

ANGOLA209

326250

291330

342427

468846

871898

924952

981

BOTSWANA

239256

285337

362393

402426

452479

507534

562591

DRC830

841895

929991

9941,027

1,0631,070

1,1001,138

1,1721,207

1,244

LESOTHO69

7785

8889

90100

107115

125130

136142

148

MALAW

I 190

185205

212236

261277

294311

330350

371394

414

MOZAM

BIQUE245

214231

234250

258273

292313

334358

383410

438

NAMIBIA

292314

320335

362371

507596

670681

692703

713724

SOUTH AFRICA27,803

27,81329,188

30,59931,621

31,92833,547

34,55335,590

36,65737,757

38,89040,057

41,258

SWAZILAND

145153

154159

160172

174180

185191

196202

208215

TANZANIA 368

394426

465474

506570

606654

700747

786873

910

ZAMBIA

1,1261,069

1,0851,087

1,1181,255

1,3161,350

1,3741,399

1,4261,499

1,5291,560

ZIMBABW

E1,950

2,0341,986

2,0132,028

2,0072,219

2,3202,387

2,4472,506

2,5672,624

2,682

TOTAL INTERCONNECTED32,699

32,77134,229

35,78136,981

37,46839,565

40,88742,155

43,41344,710

46,08547,452

48,860

TOTAL SAPP33,466

33,67635,110

36,74938,021

38,57740,839

42,25543,966

45,31446,705

48,16649,671

51,165

S T A T I S T I C S - c o n t .


S T A T I S T I C S - c o n t .TA

BLE 3

ANNU

AL EN

ERGY

SEN

T OUT

, GW

h

HIST

ORIC

FORE

CAST

YEAR

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

ANGO

LA1,3

191,5

161,1

041,8

401,8

661,9

932,4

382,6

752,8

703,0

903,3

203,6

653,8

203,9

35

BOTS

WAN

A1,5

431,6

451,8

802,0

432,1

502,2

822,4

182,5

642,7

172,8

803,0

543,2

373,4

313,6

37

DRC

N/A

N/A

N/A

N/A

5,907

6,084

6,2

676,4

556,6

486,8

487,0

537,2

647,4

827,7

07

LESO

THO

271

267

427

393

378

429

458

461

490

512

528

554

576

600

MAL

AWI *

1,023

1,087

902

1,091

1,134

1,177

1,227

1,276

1,327

1,380

1,435

1,492

1,552

1,614

MOZ

AMBI

QUE

1,076

1,186

1,212

1,257

1,307

1,392

1,489

1,594

1,705

1,825

1,952

2,089

2,235

2,392

NAM

IBIA

1,881

1,676

1,978

2,016

2136

1,421

3,710

4,038

4,400

4,456

4,512

4,567

4,623

4,679

SOUT

H AF

RICA

185,5

8318

8,475

194,6

0119

8,790

207,2

3321

7,286

219,8

5422

6,449

233,2

4324

0,240

247,4

4725

4,871

262,5

1727

0,392

SWAZ

ILAND

718

760

820

847

765

991

923

951

979

1,008

1,039

1,070

1,102

1,135

TANZ

ANIA

*2,0

962,2

402,3

942,6

542,7

083,0

523,1

433,3

343,5

563,7

824,0

254,2

384,8

205,0

21

ZAM

BIA

7,868

7,656

7,798

8,152

8,308

8,466

8,186

8,408

8,974

9,209

9,373

9,542

9,728

10,22

4

ZIM

BABW

E11

,529

12,81

112

,090

11,97

28,5

878,7

9912

,440

13,00

613

,385

13,71

714

,050

14,39

214

,713

15,03

9

TOTA

L INT

ERCO

NNEC

TED

210,4

6921

4,476

220,8

0622

5,470

236,7

7124

7,150

255,7

4526

3,926

272,5

4128

0,695

289,0

0829

7,586

306,4

0731

5,805

TOTA

L SAP

P21

4,907

219,3

1922

5,206

231,0

5524

2,479

253,3

7226

2,553

271,2

1128

0,294

288,9

4729

7,788

306,9

8131

6,599

326,3

75


TABLE 4Short-Term Generation Projects

No. Country Project Name Capacity [MW] Type Expected Year1 Angola Capanda 260 Hydro 20072 Botswana Morupule Expansion 240 Coal 20093 DRC Refurbish Inga-1 & 2 500 Hydro 20074 Lesotho Muela Phase-2 110 Hydro 20105 Malawi Kaphichira Phase-2 64 Hydro 20096 Namibia Kudu 800 Gas 20097 South Africa Mothballed Plants 3,500 Coal 2005 to 2010

Open Cycle Gas Turbine 500 Gas 20088 Swaziland Maguga 20 Hydro 20079 Zambia Refurbishment 210 Hydro 2006

Itezhi-Tezhi 120 Hydro 2007Kafue Lower 600 Hydro 2009Kariba North 360 Hydro 2009

10 Zimbabwe Kariba South 300 Hydro 2007Hwange 7 & 8 660 Thermal 2008Lupani 300 Gas 2009TOTAL 8,544

TABLE 5Long-Term Generation Projects

No. Country Project Name Capacity [MW] Type Expected Year1 Botswana Mmamabula 3,600 Thermal 20152 DRC Inga-3 3,500 Hydro 2010

Grand Inga Phase-1 6,000 Hydro 20123 Lesotho Musanga 230 Hydro4 Malawi Kholombizo 240 Hydro 2018

Mpatamanga 260 Hydro 2020Fufu 100 Hydro 2012

5 Mozambique Mepanda Uncua 1,300 Hydro 2010Moatize 1,000 Coal 2014Massingir 40 Hydro

6 Namibia Epupa 360 Hydro 2015Popa 23 Hydro 2015

7 South Africa Greenfield 4,000 CoalGreenfield 2,500 Coal2xCGT 1,500 Gas2xPumped Storage 2,330 Hydro 2013

8 Swaziland Lubombo 1,000 Thermal Beyond 20109 Zambia Expansion Kariba North 200 Hydro 2020

Kalungwishi 220 Hydro 2014-201510 Zimbabwe Batoka 800 Hydro 2014

Gokwe North 1,300 Coal 2020TOTAL 30,503

S T A T I S T I C S - c o n t .


We have audited the annual financial statements set out on pages 3 to 9 for the year ended

31 March 2004.

Respective responsibilities of the executive committee and auditors

The financial statements are the responsibility of the executive committee of the organisation. Our

responsibility is to express an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with approved International Standards on Auditing. Those

standards require that we plan and perform the audit to obtain reasonable assurance that the

financial statements are free of material misstatement.

An audit includes:

- Examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements,

- Assessing the accounting principles used and significant estimates made by management, and

- Evaluating the overall financial statement presentation.

Audit opinion

In our opinion, the financial statements, in all material respects, give a true and fair view, of the

financial position of the organisation at 31 March 2004 and of the results of its operations and cash

flows for the year then ended in conformity with International Financial Reporting Standards.

CHARTERED ACCOUNTANTS (ZIMBABWE)

HARARE 23 June 2004

R E P O R T O F T H E I N D E P E N D E N T A U D I T O R S T O T H E M E M B E R S O F S O U T H E R N A F R I C A N P O W E R P O O L


The following principal accounting policies havebeen consistently applied throughout the period:

ACCOUNTING CONVENTIONThe financial statements are prepared under thehistorical cost convention. No procedures areadopted to reflect the impact on the financialstatements of specific price changes orchanges in the general level of prices.

CURRENCYThe financial statements are expressed inUnited States dollars. Assets and liabilities aretranslated to the relevant currencies at theexchange rate ruling on the balance sheet date,income and expenditure items are translated atthe ruling average monthly rates for the periodto which they relate. Realised exchangedifferences are taken to the income statement inthe year in which they arise. Surpluses anddeficits on translation are dealt with in theincome statement in the determination of net income.

DEPRECIATIONFixed assets are depreciated over theirexpected useful lives on a straight line basis asfollows:-

Computer equipment - 3 yearsOffice equipment - 5 yearsOffice furniture and fittings - 10 years

The carrying amounts of fixed assets arereviewed at each balance sheet date to assesswhether they are recorded in excess of theirreceivable amounts and where carrying values exceed this estimated recoverable

amount, assets are written down to theirrecoverable amount.

SPECIAL FUNDFunds granted for specific purposes are notincluded in the income and expenditureaccount, but are accounted for separately asSpecial Fund on the balance sheet. They aremaintained in a separate bank account and anyinterest earned on the unused funds is creditedto the Special Fund.

PROVISIONSProvisions are recognised when theOrganisation has a present obligation (legal orconstructive) as a result of a past event, it isprobable that an outflow of resourcesembodying economic benefits will be requiredto settle the obligation and a reliable estimatecan be made of the amounts of the obligation.

RETIREMENT BENEFIT COSTSRetirement benefits are provided for theorganisation employees through the NationalSocial Security Authority (NSSA) scheme.Employer's contributions to the NSSA schemeare charged to the income statement when due.

REVENUE RECOGNITIONFunds Income Income received is based on aset budget agreed upon by all members of theorganisation and contributions made bymembers are based on set percentages andproportions based on electricity usage. Theincome is brought to account per issued invoiceto each of the member countries. InterestRevenue is recognised as the interest accrues.

S T A T E M E N T O F A C C O U N T I N G P O L I C I E S


FOR THE YEAR ENDED 31 MARCH 2004

Notes 2004 2003US$ US$

INCOME OPERATING INCOMEOperating members 75 000 75 000Imported energy 75 000 75 000Peak demand 50 000 50 000Thermal rating 25 000 25 000Host member 25 000 25 000Short Term Energy Market 42 108 55 672________ ________

292 108 305 672________ ________

OTHER INCOME/EXPENSESSundry income - 9 152Foreign exchange (loss)/gain (2 646) (67 497)Foreign exchange difference on fixed assets (10 699) -Interest received 16 077 30 068________ ________

294 840 277 395________ ________

EXPENDITUREWestcor Project expenses 1 738 1 481NORAD Project expenses - 5 669Administration expenses 2 215 137 262 840

SURPLUS/(DEFICIT) FOR THE YEAR TRANSFERRED ________ ________TO ACCUMULATED FUND 3 77 965 7 405________ ________________ ________

I N C O M E S T A T E M E N T


31 MARCH 2004Notes 2004 2003

US$ US$FUNDS AND LIABILITIES FUNDSAccumulated funds 3 275 073 222 108Special fund - NORAD Grant 543 716 -General reserve 50 000 25 000

CURRENT LIABILITIESAccounts payable 4 20 362 19 781________ ________TOTAL LIABILITIES 889 151 266 889________ ________________ ________

ASSETS NON-CURRENT ASSETSProperty, plant and equipment 5 40 220 60 190

CURRENT ASSETSInvestments - 42 188Accounts receivable 6 52 964 25 090Cash at bank and on hand- Co-ordination centre funds 252 251 139 421- Special fund - NORAD Grant 543 716 -________ ________TOTAL ASSETS 889 151 266 889________ ________________ ________

E JOHNSONCO-ORDINATION CENTRE BOARD CHAIRPERSON

L MUSABACO-ORDINATION CENTRE MANAGER

SOUTHERN AFRICAN POWER POOL SENIOR ADVISOR23 June 2004

B A L A N C E S H E E T


FOR THE YEAR ENDED 31 MARCH 2004Note 2004 2003

US$ US$

NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 1 65 377 (21 289)

RETURNS ON INVESTMENTSInterest received 16 077 30 068Interest paid (210) (15)

INVESTING ACTIVITIESCapital expenditure (10 602) (21 090)Purchase of investments - (42 188)Disposal of investment 42 188 -

FINANCING ACTIVITIESGrants received 543 716 -Grants utilised/remitted - (58 542)________ ________INCREASE/(DECREASE) IN CASH RESOURCES 656 546 (113 056)________ ________________ ________

NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 1This is arrived at as follows:Surplus for the year 77 965 7 405Depreciation 19 873 21 072Exchange difference on fixed assets 10 699 -Interest receivable (16 077) (30 068)Interest payable 210 15(Increase) in accounts receivable (27 874) ( 8 828)(Decrease)/increase in accounts payable 2 876 (7 188)Increase in provisions (2 295) ( 3 697)________ ________

65 377 (21 289)________ ________________ ________

INCREASE/(DECREASE) IN CASH RESOURCES 2The increase in cash resources is representedby a movement in balances, as follows:At 1 April 2003 139 421 252 47At 31 March 2004 795 967 139 421________ ________

656 546 (113 056)________ ________________ ________

C A S H F L O W S T A T E M E N T


31 MARCH 20042004 2003US$ US$

1 ACTIVITIESThe main object of the organisation is to co-ordinate the planning and development of electricity inter-connections between members' respective networks and to expand the Interconnected Power Systemand electricity trading in the region.

2 ADMINISTRATIONCleaning 18 16Audit fee- current year annual audit 1 843 2 567- STEM review 541 1 241Advertising and promotions - 104Bank charges 7 590 981Computer expenses 1 811 1 280Consultancy 2 500 -Courier and postage 2 778 873Depreciation 19 873 21 072Entertainment 237 143Insurance 953 280Interest paid 210 15Magazines and books 50 45Printing and stationery 2 257 1 335Recruitment and relocation 383 71Rent paid 4 488 4 510Repairs and maintenance 346 256Salaries and wages 105 664 123 902Staff expenses 169 1Staff training 2 924 700Subscriptions 102 26Sundry expenses 1 514 1 047Telephone and fax 2 861 2 195Telecommunications 2 729 13 940Travel and accommodation 25 268 52 786Withholding tax on interest 1 239 425Reports and periodicals 9 650 2 642Official opening of Coordination Centre - 6 728Telecommunications - Visual Satellite Automatic Terminal (VSAT) 17 139 23 659________ ________TOTAL ADMINISTRATION EXPENSES 215 137 262 840________ ________________ ________SUNDRY EXPENSESWorkshop lunch - -________ ________

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S


31 MARCH 20042004 2003US$ US$

3 ACCUMULATED FUNDAt 1 April 2003 222 108 239 70Surplus for the year 77 965 7 405Transfer to General Reserve (25 000) (25 000)________ ________At 31 March 2004 275 073 222 108________ ________________ ________

4 ACCOUNTS PAYABLEProvisions 11 725 14 020Other creditors 8 637 5 761________ ________

20 362 19 781________ ________________ ________

5 PROPERTY, PLANT AND EQUIPMENT5.1 Summary

Computer equipmentCost 54 842 55 354Aggregate depreciation 42 427 31 770________ ________Net book value 12 415 23 584________ ________Office equipmentCost 20 000 25 727Aggregate depreciation 14 273 10 533________ ________Net book value 5 727 15 194________ ________Office furniture and fittingsCost 34 536 28 395Aggregate depreciation 12 458 6 983________ ________Net book value 22 078 21 412________ ________Total Cost 109 378 109 476Aggregate depreciation 69 158 49 286________ ________Net book value 40 220 60 190________ ________________ ________

5.2 Movements for the yearNet book value of total property, plant and equipment at 1 April 2003 60 190 60 172________ ________Capital expenditure - at costComputer equipment 7 699 19 040Office equipment 93 -Office furniture and fittings 2 810 2 050________ ________

10 602 21 090________ ________Foreign exchange difference (10 699) -________ ________

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - c o n t .


31 MARCH 20042004 2003US$ US$

5 PROPERTY, PLANT AND EQUIPMENT (continued)5.2 Movements for the year (continued)

Depreciation chargeComputer equipment 10 658 14 540Office equipment 3 741 3 967Furniture 5 474 2 565________ ________

19 873 21 072________ ________Net book value of total property, plant and equipment at 31 March 2004 40 220 60 190________ ________________ ________The foreign exchange difference arose from conversion of the fixed assets bought over the years from Zimbabwe dollars to United States dollars, due to different exchange rates at the date of acquisition of each asset and the balance sheet date.

6 ACCOUNTS RECEIVABLETrade debtors 39 581 1 943United States Agency for International Development (USAID) 7 943 17 130Prepayments 4 542 3 993Other debtors 898 2 024________ ________

52 964 25 090________ ________________ ________

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S - c o n t .



Investor Relations

Southern African Power Pool 2004 annual report