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Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
Southern African Power Pool 2006 annual report
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Southern African Power Pool 2006 annual report

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Southern African Power Pool 2006 annual report

Southern African Power Pool 2006 annual report

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  • 1. Contents Vision and Objectives ........................................................................................................................................................................................................................... 2 Organogram and Members ............................................................................................................................................................................................................... 3 About SAPP ....................................................................................................................................................................................................................................................... 4 Highlights of SAPP Activities ........................................................................................................................................................................................................... 5 SAPP Executive Committee ................................................................................................................................................................................................................ 7 Executive Committee Chairman’s Report .............................................................................................................................................................................. 8 Management Sub-Committee Report ........................................................................................................................................................................................ 12 Operating Sub-Committee Report ................................................................................................................................................................................................ 14 Planning Sub-Committee Report 2005/6 ................................................................................................................................................................................ 18 Environmental Sub-Committee Report ................................................................................................................................................................................... 21 SAPP Co-ordination Centre Report ............................................................................................................................................................................................. 23 Statistics 2005/6 ............................................................................................................................................................................................................................................ 27 Report of the Independent Auditors ........................................................................................................................................................................................... 31 Statement of Accounting Policies ................................................................................................................................................................................................. 32 Income Statement ........................................................................................................................................................................................................................................ 33 Balance Sheet .................................................................................................................................................................................................................................................. 34 Cash Flow Statement ................................................................................................................................................................................................................................ 35 Notes to the Financial Statements ................................................................................................................................................................................................ 36 1 Southern African Power Pool ANNUAL REPORT 2006
  • 2. Vision and Objectives Vision The 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. Objectives The 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. 2 Southern African Power Pool ANNUAL REPORT 2006
  • 3. Organogram and Members SAPP Membership Full Name of Utility Status Abbreviation Country Botswana Power Corporation OP BPC Botswana Electricidade de Mocambique OP EDM Mozambique Electricity Supply Corporation of Malawi NP ESCOM Malawi Empresa Nacional de Electricidade NP ENE Angola ESKOM OP Eskom South Africa Lesotho Electricity Corporation OP LEC Lesotho NAMPOWER OP NamPower Namibia Societe Nationale d’Electricite OP SNEL DRC Swaziland Electricity Board OP SEB Swaziland Tanzania Electricity Supply Company Ltd NP TANESCO Tanzania ZESCO Limited OP ZESCO Zambia Zimbabwe Electricity Supply Authority OP ZESA Zimbabwe OP = Operating Member NP = Non-Operating Member Southern African Power Pool ANNUAL REPORT 2006 3
  • 4. About SAPP rules of operation and pricing; and the Operating Guidelines, which provide standards and operating guidelines. • SAPP has twelve member countries represented by their respective electric power utilities organised through SADC. • SAPP has three working committees: the Operating Sub-Committee, the Planning Sub-Committee and the Environmental Sub-Committee under a Management Committee which in turn reports to the Executive Committee. • • SAPP was created in August 1995 at the SADC summit held in Kempton Park, South Africa, when member governments of SADC (excluding Mauritius) signed an Inter-Governmental Memorandum of Understanding for the formation of an electricity power pool in the region under the name of the Southern African Power Pool. SAPP is governed by four agreements: the InterGovernmental Memorandum of Understanding which enabled the establishment of SAPP; the Inter-Utility Memorandum of Understanding, which established SAPP’s basic management and operating principles; the Agreement Between Operating Members which established the specific 4 Southern African Power Pool ANNUAL REPORT 2006 • SAPP coordinate the planning and operation of the electric power system among member utilities. • SAPP provide a forum for regional solutions to electric energy problems. • SAPP has established and is operating the ShortTerm Energy Market.
  • 5. Highlights of SAPP Activities The year under review had seen considerable progress in the following areas: • • • • Finding a solution to the diminishing generation surplus capacity that the SADC region is currently experiencing. The expansion of the SAPP priority generation and transmission infrastructure projects is associated with the proposed solution together with the review of the SAPP Pool Plan of 2001. Continuation of SAPP restructuring and documentation review following the restructuring of the SADC Secretariat and within SAPP member countries. • Implementation of the SAPP telecommunications project that is aimed at linking the three control areas; Eskom (South Africa), ZESA (Zimbabwe) and ZESCO (Zambia) via a VSAT link in the shortterm and fibre optic in the long-term. • 1. Launch of the Westcor Office in Botswana; and Training and capacity building of SAPP Members and exposure to new changes in technology and practices. Diminishing Generation Surplus Capacity The Southern African Power Pool (SAPP) in collaboration with the Regional Electricity Regulators Association (RERA) hosted the Regional Electricity Investment Conference (REIC) in Windhoek, Namibia, from 19-21 September 2005. The meetings coincided with the SAPP 10th anniversary celebrations. The aim of the conference was to: • Provide a platform for investors both from the private and public sectors and to share ideas and discuss the challenges facing the SADC Electricity Supply Industry. • Facilitate financing and investment in the SADC short-term and long-term generation and transmission projects. Identify potential investors in the SADC electricity sector and formulate a regional approach to investment in the electricity sector and discuss ways of removing red tape to investment in the electricity sector in the region. The conference attracted more than 250 delegates from 32 countries. A total of 36 papers were presented at the conference covering a wide range of areas. On the last day of the conference, 21 September 2005, the SAPP Executive Committee held a consultative meeting with financiers, investors and cooperating partners to map a way forward and to consider recommendation and outcome from the conference. Continuation of the development of a competitive electricity market for the SADC region and also the associated development of long-term transmission pricing policy, implementation procedures and ancillary services market, and • Identify the financial needs of each SADC member state in both generation and transmission infrastructure and encourage the sharing of strategic financial and investment information. 2. Restructuring of the Southern African Power Pool At a meeting of the SADC Council of Ministers Committee that took place in Gaborone, Botswana, on 23 February 2006, the Ministers responsible for energy in the SADC region signed the Revised SAPP Inter-Governmental Memorandum of Understanding. The signing of the Revised SAPP Inter-Governmental Memorandum of Understanding was facilitated by the following: the restructuring of the SADC Secretariat that lead to the changes in the reporting structure for the SAPP; electricity sector reforms in SADC Member Countries that have led to the introduction of Electricity Regulators in many SADC countries; and the need to include other participants in the SAPP other than the national power utilities such as Independent Power Producers and the expansion of the SAPP membership. The SAPP is now working to revise the remaining base documents: Inter-Utility MOU, Agreement Between Operating Members and Operating Guidelines. It is hoped that these would be completed during 2006. Southern African Power Pool ANNUAL REPORT 2006 5
  • 6. Highlights of SAPP Activities 3. Competitive Market Development The development of the SAPP competitive electricity market accelerated during 2006 following a formal approval of the project by the SAPP Executive Committee. On 21 November 2005 and at a special meeting of the SAPP Executive Committee held in Johannesburg, South Africa, the Executive Committee agreed to the Management Committee’s proposal to continue with the development and implementation of the SAPP competitive electricity market for the SADC region. The Norwegian Government is funding the project. In May 2005, the SAPP engaged Power Planning Associates of the UK for consulting services for the Development of long-term Transmission Pricing Policy, Implementation Procedures and Ancillary Services Market Development for the Southern African Power Pool. Sida (Sweden) is financing the project and a budget of SEK 9,800,000 (nine million eight hundred thousand Swedish Kronor) has been made available over a period of approximately two years from May 2005. 4. Implementation of the SAPP VSAT Project In September of 2001, a World Bank sponsored telecommunications study was completed. The study recommended a VSAT solution in the short-term and a fibre-network in the medium to long-term. The implementation of the short-term solution, VSAT network, started in August 2005. The Contractor moved on site and installed the dish at the ZESA control centre in Zimbabwe including all the necessary communications equipment and at the Coordination Centre. Thereafter, the contractor moved to Lusaka, Zambia, in November 2005 and installed the equipment at ZESCO control centre. The remaining work is the installation of similar equipment in South Africa at the Eskom control centre and the initialisation of the VSAT system. 6 5. Other Achievements Training and capacity building of SAPP Members and exposure to new changes in technology and practices. A one-week training on the use of the Southern African Power Pool ANNUAL REPORT 2006 PSSE Software was conducted for SAPP members between 24-28 April 2006. A total of 15 delegates registered for the training that was sponsored by the Norwegian Government. WESTCOR (Pty) Ltd, formed under the auspices of SAPP to develop the Western Power Corridor was officially launched in Gaborone on 7 September 2005. The signing of the Shareholders Agreement ceremony preceded the launch. Dignitaries attended the ceremony from Namibia, Angola, South Africa, Botswana, the Democratic Republic of Congo (DRC), the SADC Secretariat and Chief Executive Officers of the five participating utilities, SNEL of Democratic Republic of Congo, ENE of Angola, NamPower of Namibia, Botswana Power Corporation of Botswana and Eskom of South Africa. At a WESTCOR (Pty) Ltd meeting held in Gaborone, Botswana on 23 February 2006, the Steering Committee of WESTCOR approved the appointment of Mr Jean T Lokala, as the Chief Operating Officer of WESTCOR with effect from 1 May 2006. Mr Jean T Lokala was working for SNEL, the national power utility in the DRC.
  • 7. SAPP Executive Committee April 2005 to March 2006 Mr John Kaluzi BPC Mr Manuel Cuambe EDM Mr Kandi Pondambo ESCOM Mr Edward Nelumba ENE Mr Thulani Gcabashe Eskom Mr Cosmas Gutu LEC Dr Leake Hangala NamPower Mr Vika di Panzu SNEL Mr Pius Gumbi SEB 7 Mr A J Van Der Merwe Managing Director, TANESCO Mr Rodnie P Sisala ZESCO Dr Sydney Gata ZESA Southern African Power Pool ANNUAL REPORT 2006
  • 8. Executive Committee Chairman’s Report Opportunities for sustainable development in the Southern African power sector”. Mr Manuel Cuambe Executive Committee Chairperson The Honourable Minister of Mines and Energy of Namibia, Honourable Erkki Nghimtina, gave a welcome speech. The Right Honourable Prime Minister of Namibia, Hon. Nahas Angula, gave the opening keynote address and officially opened the conference. The Southern African Power Pool (SAPP) is faced with the challenge of a diminishing generation surplus capacity. In order to reverse the trend, the SAPP hosted the second regional electricity investment conference in Namibia as a way of attracting investments into the SADC power sector. The first investment conference was held in Zimbabwe in September 2001. The second conference was a follow up to the first one and was well attended. The second challenge the SAPP is faced with is the embracement of cost reflective tariffs and the adoption of regulatory principles that would enhance the tariffs. The tariffs in most southern African countries are some of the lowest in the world and have remained so for a while making it difficult to sustain the operations of the grid. 1. Regional Electricity Investment Conference (REIC) The coming years are crucial to the reliability and security of supply in the Southern African Development Community (SADC) region in that the SAPP had years before predicted that the SADC region would run out of generation surplus capacity around the year 2007 if no new investments in generation and transmission infrastructure were done. 8 As a way of attracting investments into the SADC power sector, the SAPP in collaboration with the Regional Electricity Regulators Association (RERA) hosted the Regional Electricity Investment Conference (REIC) in Windhoek, Namibia, from 19-21 September 2005. The REIC conference focused on investment in electricity sector in SADC region. The theme of the conference was “Emerging Investment Southern African Power Pool ANNUAL REPORT 2006 (Left to Right) The Honourable Minister Hon. Erkki Nghimtina, Minister of Mines and Energy of Namibia, and Right Honourable, Hon. Nahas Angula, Prime Minister of Namibia. The REIC conference attracted more than 250 delegates from 32 countries. A total of 36 papers were presented at the conference covering the following areas: investment climate in the power sector in SADC; overview of the SAPP; overview of the regional electricity regulatory developments; selected power generation projects; financing of power projects; the new partnership for African development (NEPAD); coal, gas and hydro technologies; renewable energy; information and communications technology; and private sector participation in the SADC power sector. There were three panel discussions covering topics such as how can SADC governments attract investments into the power sector; are regulatory policies encouraging and attracting investments in the SADC region and how to access finance for power projects in southern Africa.
  • 9. Executive Committee Chairman’s Report (Continued) Various conference activities were sponsored by the following companies: SAPP, Electricity Control Board of Namibia, RERA, Shell, New Era, NamDeb, NamCor, emCON, Alstom, Coal Investment Corporation, Meepong Investments, NamPower, BP, NBC, Bank of Windhoek, SAHA International, Standard Bank, Republikein, Eskom, Citigroup, De Deers and Telecom Namibia. Listing, which is expected to act as a project investment guideline to Investors, the Public and the Private Sector. The SAPP Priority projects have been agreed as follows: Rehabilitation projects: These projects are currently in progress and most of them are under construction and would be completed before the end of 2007. Once completed, they would add about 3,200MW of power to the SAPP grid at an estimated cost of US$1,4 billion. • Short-term generation projects: The short-term generation projects are expected to be completed in 2010. Feasibility studies and environmental impact assessments on the projects have been completed. Some of the projects have secured funding and others have not. Once completed, the short-term generation projects will add about 4,200MW to the SAPP grid at an estimated cost of US$3,8 billion. • Amongst the financiers, investors and cooperating partners that were represented at the conference included the European Commission, World Bank, Development Bank of Southern Africa, INFRACO, Barclays Bank, African Development Bank, Citigroup, Bank of Tokyo-Mitsubishi, European Investment Bank, YTL Malaysia and GE of the USA. • Transmission projects: These aim to interconnect the three non-operating members of the SAPP (Angola, Malawi and Tanzania) to the SAPP grid. The transmission projects also aim to relieve congestion on the SAPP grid and to evacuate power from the generating stations to the load centres. • Medium to long-term generation projects: These are meant to supply power to the SADC region in the medium to long-term. Notable among them is the Western Power Corridor Project, Westcor, which is expected to move 3,500-4,000MW of power from Inga-3 in the DRC to southern Africa and to pick up 6,500MW of generation at Kwanza River in Angola. Dr Vicente Veloso (left) with some of the delegates who attended the conference. On the last day of the conference, 21 September 2005, the SAPP Executive Committee held a consultative meeting with financiers, investors and cooperating partners to map a way forward and to consider the recommendations and outcome from the conference. Following the REIC conference, the SAPP being a regional organisation responsible for the supply of power to the SADC region had put in place the following measures to avert an impending power crisis: (i) Implementation of Priority Projects The SAPP has formulated a Priority Project (ii) Marketing of SAPP Priority Projects The SAPP via the NEPAD initiative is working with the Ministers responsible for Southern African Power Pool ANNUAL REPORT 2006 9
  • 10. Executive Committee Chairman’s Report energy in the SADC region to market the priority projects and attract funding for the short and long-term generation and transmission projects. The REIC conference was aimed at marketing the SAPP priority projects and attract investors into the SADC power sector. (iii) Energy Regulation and Tariffs The Ministers responsible for energy in the SADC region pledged to address regulation and implement cost reflective tariffs and adopt regulatory principles that would enhance those tariffs. Political support from the SADC governments is essential for cost reflective tariffs to be implemented. • Dr Vicente Veloso, the former Chairman of EDM and the also the former Chairperson of the SAPP Executive Committee from April 2005 to October 2005. Dr Veloso is no longer with EDM but is now working for the Ministry of Foreign Affairs of Mozambique. • Dr Leake Hangala, the former Managing Director of NamPower and also the former Chairperson of the SAPP Executive Committee from April 2003 to April 2005. Dr Hangala is no longer with NamPower but is now in the Private Sector. 2. Tenth Anniversary Celebrations On 21 September 2005, the SAPP celebrated the 10th anniversary that coincided with the REIC conference. Over 200 delegates attended the celebrations. High profile dignitaries who attended the conference included the Chief Justice of Namibia, the Minister of Mines and Energy of Namibia, the Ministers responsible for energy of Angola, Swaziland and Zimbabwe. Speakers at this function included the Permanent Secretary in the Ministry of Mines and Energy of Namibia, the SAPP Executive Committee Chairperson, the SADC Deputy Executive Secretary and the Minister of Mines and Energy of Namibia. 3. Acknowledgements 10 Dr Leake Hangala NamPower 4. Tribute I would like to pay tribute to the late Managing Director of LEC, Mr Simon Mhaville, who passed away on 20 December 2005. At the time of his death, Mr Simon Mhaville was the Vice Chairperson of the SAPP Executive Committee. He died of a heart attack in Tanzania whilst on holiday and was buried in Tanzania on 22 December 2005. May his soul rest in peace. I would like to acknowledge the contributions made to SAPP by the following former members of the SAPP Executive Committee: The late, Mr Simon L Mhaville, former Managing Director of LEC 5. New Executive Committee Members Dr Vicente Veloso Southern African Power Pool ANNUAL REPORT 2006 The following members joined the SAPP Executive Committee during the year under review.
  • 11. Executive Committee Chairman’s Report (Continued) • The Board of LEC appointed Mr Cosmas Gutu, Managing Director of LEC, with effect from 1 January 2006. Mr Cosmas Gutu Managing Director of LEC • The Board of Directors of TANESCO appointed Mr Adriaan Jacobus Van Der Merwe as Managing Director of TANESCO with effect from 1 January 2006. Mr Adriaan Jacobus Van Der Merwe is a graduate engineer from University of Stellenbosch, and also holds MCom degree from University of Free State. He is a registered Professional Engineer with ESCA and has various awards to his credit. Adriaan has also participated in many career and professional committees. Honourable Minister of Energy of Mozambique, Hon Salvador Namburete, speaking during the official opening ceremony of the 20th SAPP Executive Committee Meeting, 26 April 2006. (Left to Right): Mr Cosmas Gutu, Managing Director of LEC and Vice Chairperson of the Executive Committee; Mr Manuel Cuambe, Chairman of EDM and Chairperson of the Executive Committee; and Dr Lawrence Musaba, Coordination Centre Manager. Mr Adriaan Jacobus Van Der Merwe Managing Director, TANESCO • The Board of EDM officially appointed Mr Manuel Joao Cuambe as the new Chief Executive Officer of EDM with effect from 8 November 2005. Mr Cuambe also became the Chairperson of the SAPP Executive Committee, taking over from Dr Vicente Veloso who left EDM. Mr Cuambe joined EDM 17 years ago, having played an outstanding role in the development of EDM’s national grid. At SAPP level, Mr Cuambe participated as active member of the SAPP Planning Sub-Committee and Management Committee from 1995 to 1999. 11 Mr Manuel Cuambe Chairperson, SAPP Executive Committee Southern African Power Pool ANNUAL REPORT 2006
  • 12. Management Sub-Committee Report Mr Augusto De Sousa Fernando Management Committee Chairperson The SAPP is undergoing a restructuring process and the Management Committee is the one responsible for revising the SAPP documents and aligning them to suit the new environment. During the period under review, the Inter-Governmental MOU was completed and circulated to all members for approval. The Management Committee also started the reviewing of the Inter-Utility MOU, Agreement Between Operating Members and Operating Guidelines. The Management Committee is also the link between SAPP and other stakeholders. Governmental Memorandum of Understanding was facilitated by the restructuring of the SADC Secretariat that lead to the changes in the reporting structure for the SAPP; electricity sector reforms in SADC Member Countries that have led to the introduction of Electricity Regulators in many SADC countries; and the need to include other participants in the SAPP other than the national power utilities such as Independent Power Producers, and the expansion of the SAPP membership. (Left to Right): Minister of Mines and Energy of Namibia, Hon. Erkki Nghimtina, and the Swaziland Minister of Energy and Natural Resources Hon. Mfomfo Nkambule, signing the Revised Inter-Governmental MOU. 2. SAPP Priority Projects 12 (Left to Right): Retired Lt. General Mike Nyambuya, Honourable Minister of Energy and Power Development of Zimbabwe and Mrs Lindiwe Hendricks, Honourable Minister of Energy and Minerals of South Africa, signing the Revised Inter-Governmental MOU, at a ceremony in Botswana on 23 February 2006. 1. SAPP Documentation Review The meeting of the SADC Council of Ministers took place in Gaborone, Botswana, on 23 February 2006. In the evening of the same day, the Ministers responsible for energy in the SADC region signed the Revised SAPP InterGovernmental Memorandum of Understanding. The signing of the Revised SAPP Inter- Southern African Power Pool ANNUAL REPORT 2006 On 22 September 2005, a special SAPP Executive Committee meeting was held in Namibia to map a way forward in the marketing and sourcing of funds for the SAPP priority generation and transmission projects. It was during the meeting that the SAPP Executive Committee agreed to develop prioritisation and selection criteria that could be used to prioritise the projects in the SAPP. The Executive Committee also agreed that the final list of the SAPP priority projects could be promoted by SAPP for funding. The task of developing the criteria and using it to select priority projects in the SAPP was given to the Management Committee and the Management Committee went ahead and developed the criteria that was later approved by the Executive Committee.
  • 13. Management Sub-Committee Report (Continued) 3. Cooperation with other power pools The 37th General Assembly of the Union of Producers, Transporters, and Distributors of Electric Power in Africa (UPDEA) took place in Lusaka, Zambia, from 24-25 November 2005. The Honourable Vice President of Zambia, Mr Lupando Mwape, officially opened the assembly and the exhibitions. • East African Power Pool, EAPP • Southern African Power Pool, SAPP, and • West African Power Pool, WAPP. The parties agreed to co-operate in the following areas: Exchanges of information and know-how. 4. Acknowledgements I wish to acknowledge the support that I received from Members of the SAPP Management Committee during the year without whom nothing would have been achieved. May I take this opportunity and congratulate Messrs Mr Lovemore Chilimanzi and Mr Mbuso Gwafila, who were elected to the positions of Chairpersons of the Operating and Planning SubCommittee’s respectively. Also congratulations to Mr Vusimuzi Simelane, the newly elected Chairperson of the Environmental Sub-Committee. Special thanks also goes to the SAPP Coordination Centre for the work the centre is doing in coordinating the activities of the SAPP. 13 Mr Augusto de Sousa Fernando Management Committee Chairperson Central African Power Pool, CAPP • Exchange of experiences in regional cooperation, codes of practice, electricity pricing methodologies and wheeling charges, and • • Promotion of an integrated electricity plan that can lead to electricity market in Africa as a region, • The five power pools operating in Africa signed a cooperation framework under which the parties agreed to cooperate and share information. The purpose of signing the cooperation framework was to record an understanding between the parties on their working relationship and technical cooperation. The cooperation framework does not make any legally binding or otherwise enforceable commitments on behalf of any of the parties. The parties that signed the cooperation framework included: Harmonization of master-plans and programmes between sub-regional power pools, • In the framework of NEPAD, UPDEA has set itself the goal of being a development-oriented institution to serve the African Power Sector. The purpose of UPDEA extends to participation in the development of the power sector in conjunction with regional, continental and international players. Its vision is to be the primary catalyst in the realization of access to electricity of all the peoples of Africa. Harmonization of policies concerning subregional power interconnections, • The Honourable Vice President of Zambia, Mr Lupando Mwape (front row in a cream/white suit) poses with UPDEA Executive Members. • COMELEC of North Africa Southern African Power Pool ANNUAL REPORT 2006
  • 14. Operating Sub-Committee Report rehabilitation and maintenance works in their respective countries. Mr Lovemore Chilimanzi Operating Sub-Committee Chairperson Mr L Chilimanzi took over from Ms Erica Johnson as Chairperson of the OSC from September 2005. 1. The Short-Term Energy Market (STEM) STEM reached its 5th year of operation in April 2006. The demand has been rising every year from 766-GWh in 2001 to 4,222-GWh in 2004. The supply side for the first four years has been around 2,500-GWh. The energy traded was on the rise in the first two years and then declined steadily in the last two years. It reached a high of 842-GWh of energy traded in 2002 and dropped to 178-GWh in 2005. Figure-1 shows a detailed comparison. 14 Figure 2: Energy Trade versus monetary value Summary from year beginning 2001 to 2005. The STEM has also seen prices firming up since inception. The highest average price of 1,24 USc/ kWh was recorded in 2005. This is characteristic of the increasing demand and declining supply as highlighted above. Figure 1: Energy Trade Summary from year beginning 2001 to 2005. Figure 3: STEM Energy Prices (2001-2005). The total sales in monetary value have been increasing every year. The highest sale was recorded in 2004 when total sales amounted to USD4,4 million. The year 2005 saw a decline in sales due to reduced energy trade. This was mainly due to few members participating in the STEM. HCB of Mozambique and ZESCO of Zambia did not participate in the STEM as the two utilities embarked on major power generation Southern African Power Pool ANNUAL REPORT 2006 2. Bilateral Market Energy trading via bilateral contracts picked up from around 16-TWh in 2004 to 19-TWh in 2005. In general, the region is experiencing an increase in bilateral energy trading amongst SAPP members. However, there was a reduction in in 2004 due to major power rehabilitation and maintenance work in Mozambique and Zambia.
  • 15. Operating Sub-Committee Report (Continued) required information would be made available in phases and that individual members would cater for integration expenses such as software level upgrades or Interface Hardware (Cards or Modules) as required by the member utility infrastructure. Figure 4: Bilateral Trading (2002-2005). 3. SAPP Telecommunications Project Minimum telecommunications requirements for SAPP are embodied in the SAPP Operating Guidelines of August 1996. In September of 2001, a World Bank sponsored telecommunications study was completed. The study recommended a VSAT solution in the short-term and a fibrenetwork in the medium to long-term. The implementation of the three terminal short-term VSAT solution started in August 2005. The Contractor moved on site and installed the dish at the ZESA control centre in Zimbabwe including all the necessary communications equipment at ZESA control centre and at the Coordination Centre. Thereafter, the contractor moved to Lusaka, Zambia, in November 2005 and installed the equipment at ZESCO control centre. The remaining work is the installation of similar equipment at the Eskom control centre in South Africa and the initialisation of the system. There is a delay in the installation of the system in South Africa due to licensing problems. On 16 November 2005, Telecommunication experts from Eskom (South Africa) and ZESA (Zimbabwe) met at the Coordination Centre in Zimbabwe to discuss VSAT integration with the existing SAPP infrastructure and particularly detail how the SCADA and trading information will pass from the Energy Management System (EMS) to the SAPP Server and vice versa to enable operational personnel to receive useable information. The experts also agreed that the Installed VSAT dish at the ZESA control centre in Harare, Zimbabwe. 4. Working Group Reports 4.1 Traders and Operators Forum SAPP continued to support the Traders and Operators forum. The second Traders and Operators Forum meeting took place in Gaborone, Botswana, from 28-29 November 2005. The Forum discussed many trading issues which were referred to the OSC for resolution. The Forum also discussed operational issues that included the monitoring of system reserves, frequency control, time error correction, coordination of information under abnormal conditions and adherence to the SAPP Operating Guidelines. In addition, participants were trained on the use of the Internet based trading system that was implemented at the SAPP Coordination Centre during the year. Southern African Power Pool ANNUAL REPORT 2006 15
  • 16. Operating Sub-Committee Report 4.2 Markets Development The Norwegian Government is funding the development of a competitive electricity market for the SADC region. Nord Pool ASA (NP) of Norway won the tender for the supply, installation and implementation of the SAPP Trading Platform in February 2005 after a competitive tender. The tender award was approved by the SAPP Executive Committee in November 2005. Contract negotiations between SAPP and NP then started. Final contract negotiations took place in Harare from 1819 January 2006 culminating in the two parties signing two agreements stated below. • SAPP-NP Delivery Contract, 19 Jan 2006. • SAPP-NP Support Contract, 19 Jan 2006. Queries on specifications for the SAPP Day Ahead market were agreed and finalized by SAPP and Nord Pool at the OSC meeting in Tanzania on 1 March 2006. Points discussed were relating to the treatment of bilateral contracts, block bids; value added tax, fees and the level of security that will be required by SAPP from participants. The two parties confirmed that the trading platform will be delivered in November 2006 and market trials would be expected to start after January 2007. The creation of a balancing mechanism for handling imbalances consistent with the proposed SAPP market platform is now under consideration. 5. System Operations 16 5.1 SAPP Transfer Limits The SAPP Study Group finalised the transfer limit studies. The report was finalised and the applicable transfer limits were distributed to the Planning and Operating Sub Committees for consideration. 5.2 Treatment of Losses Part of the terms of reference for the consultant appointed for the Sida funded Southern African Power Pool ANNUAL REPORT 2006 project on the development of transmission pricing policy, implementation procedures and ancillary services market, is to address treatment of losses arising from transnational wheeling. The work is in progress but in the meantime, the OSC has agreed that members would continue to settle losses in kind and financially. 5.3 Transmission Wheeling Path The three Control Areas in the SAPP (Eskom, ZESA and ZESCO) submit and exchange their trading schedules in advance before the day of trade. However, it has been observed that in many cases, the declared schedules are exceeded. This is a violation of the SAPP Operating Guidelines (OG) as the changes need to be agreed in advance. In 2005, a lot of instances for exceeding schedules were observed by the wheeling members and the incidences were reported to the SAPP Coordination Centre. The SAPPOG do not cover the issue of unscheduled wheeling. The OSC has a challenge to come up with guidelines when the declared schedules are exceeded. At an operational meeting held in Harare on 15 August 2005, the importance of adhering to the operational discipline stipulated in the SAPP-OG was stressed. Improvements are yet to be realised. 5.4 Inadvertent Energy Management The three Control Areas have finalised their inadvertent energy figures from 2004 up to December 2005. The agreed figures have been reconciled and were made available to the SAPP Coordination Centre on 31 March 2006. Among the three control areas, agreements have been reached for the payback of the energy. 5.5 Emergency energy rates The OSC mandated the SAPP Coordination Centre to negotiate emergency energy rates for all members with the three control areas
  • 17. Operating Sub-Committee Report (Continued) Table 1: Table indicating the SAPP major System faults in 2005 No. Member Country Major Disturbances Main Cause of Disturbance 1 BPC, Botswana 2 Line faults on the Phokoje-Matimba line in Botswana. 2 EDM, Mozambique 2 Transformer tap-changer fault and broken junction of a line conductor. 3 Eskom, South Africa 4 Problem with transformer, fault on reactor and fire under transmission line. 4 SNEL, DRC 3 Collapse of towers and broken conductors. 5 ZESCO, Zambia 5 Landslides due to heavy rains and thunderstorms. Total 16 (Eskom, ZESA and ZESCO) and to thereafter make a recommendation. The intention was that the new rates would take effect from 15 June 2006. 5.6 Maintenance Schedules SAPP Members submitted their maintenance schedules to the SAPP Coordination Centre for the coming year that starts on 1 April 2006 for reconciliation and publication. to line faults on the Phokoje-Matimba line within Botswana and resulted in a total blackout on 3 November 2005. The disturbances in Zambia were known and were mostly due to the act of God. The disturbances in the DRC could have been prevented if regular checkups on the tower lines and maintenance were done to avoid further collapse of the towers. 5.7 System Disturbances In the period under review, over 20 system disturbances occurred on the SAPP network. The 16 major disturbances are summarised in the Table above. Most of the disturbances that occurred in Botswana were attributed Mr Lovemore Chilimanzi Operating Sub-Committee Chairperson 17 Southern African Power Pool ANNUAL REPORT 2006
  • 18. Planning Sub-Committee Report 2005/6 • Mr Mbuso Gwafila of BPC (Botswana) Planning Sub-Committee Chairperson 1. Introduction The Planning Sub Committee is pivotal to the provision of reliable information regarding the power supply situation in the SADC region. It is this proactive approach that issue of the diminishing generation surplus capacity is actively being addressed. Generation projects are being tracked to assess their status and progress to meet their target commissioning dates. In the year under review various projects were commissioned. Most countries experienced a positive demand growth with Botswana, Mozambique, Namibia and Malawi recording the highest demand growth of 7,96%, 7,1% 6,51% and 6,5% respectively. Negative growth was recorded in South Africa and Zimbabwe with – 2,2% and – 0,1% respectively. Mr. Mbuso Gwafila of BPC was nominated to be the Planning Sub Committee Chairperson taking over from Mrs Angela Dava of EdM. The Planning Sub-Committee thanked Mrs Dava for her excellent leadership for the past two years 2. Diminishing Generation Surplus Capacity 18 It is the objective of SAPP to have a robust generation capacity plan with adequate reserve margins to cater for forced outages and load forecast error. The annual demand is increased by 3 percent. Different projects were identified in the following classes: • Rehabilitation Projects • Short term generation projects • Long term generation projects • Transmission interconnector projects aimed at interconnecting the SAPP non-operating members namely Angola, Malawi and Tanzania. Southern African Power Pool ANNUAL REPORT 2006 Transmission projects, which relieve congestion within the major wheeling countries that would increase trade. Graph 1 below highlights the demand and supply situation when the rehabilitation and short-term projects are commissioned. It can be noted that the capacity shortfall can be contained if all planned projects are commissioned. A 150 MW unit was returned to service in December 2005 at Kariba North hydro power station in Zambia. Construction work started at the Tedzani I and II hydro power plant rehabilitation programme. 40 MW would be available to Malawi when the rehabilitation is completed in June 2007. It remains a challenge for SAPP to meet the everincreasing demand to ensure security of supply. 3. Transmission Pricing and Ancillary Services Market Development SAPP secured funding from Sida for the development of a long-term transmission pricing policy, implementation procedures and ancillary services market development. In May 2005, Power Planning Associates of the UK was awarded the contract to carry out the study. The methodology for determining transmission pricing was agreed to be a nodal pricing approach. Transmission loss factors across the SAPP network were also determined. On the ancillary services market development, three broad categories of services were agreed upon and are to be evaluated further as follows: • • • Reactive Power and Voltage Control Frequency Control Services • Instantaneous reserves • 10 – minute reserves • Regulating Reserves Black Start Capability The high-level market design principles and criteria have been developed. A methodology for charging and remunerating services is to be agreed upon. The costing components for each service were developed. The ancillary services market is expected to be operational in 2007.
  • 19. Planning Sub-Committee Report 2005/6 (Continued) 4. SAPP Pool Plan Review In December 2005, the World Bank informed SAPP that the Bank had approved funding to SAPP for the review of the SAPP Pool Plan through an Africa Region Energy Sector Management Assistance Program (ESMAP) facility. Tenders were floated and six companies were short-listed and the World Bank was still reviewing the tenders by the time of writing this report. The Pool Plan would be a regional integrated generation and transmission plan highlighting the benefits of optimizing the generation resources. The studies would start in July 2006. 5. Transmission Interconnector Projects 5.3 Mozambique – Malawi HCB of Mozambique and ESCOM of Malawi finalized the negotiations on the Power Purchase Agreement. This would lead to the construction of a 219 kilometer 220 kV transmission line from Tete in Mozambique to Phombeya in Malawi, construction and extension of related substations in the two countries. The estimated construction period is 24 months. Bankable documents were prepared and finalized. 5.4 Zambia – Tanzania – Kenya • A grant of approximately USD 1,2 million was secured from World Bank, ADB and DBSA for the feasibility studies • Scoping Studies on the Tanzania side were completed for the EIA • ZESCO completed studies on the Zambian side. Negotiations with a transactions advisor who is a Consortium comprising of Technical, financial and legal specialists are to be undertaken. • Discussions are underway with Kenyan government who are interested in taking part in the project. 5.1 WESTCOR The Project Office for the WESTCOR Project was set up in Gaborone, Botswana. The Chief Operating Officer was also appointed. Feasibility studies for the transfer of 3500 MW from Inga in DRC to Botswana, Namibia and South Africa using the HVDC technology would be done. Options for connecting the Cunene hydro power plants in Angola would be investigated. 5.2 DRC – Zambia SNEL, Copper Belt Energy Corporation and ZESCO carried out detailed studies to evaluate the maximum transfer limit on the existing DRC – Zambia 220 kV line. It was concluded that the line could carry a maximum of 310 MW. ZESCO of Zambia has finished the construction of a 330 kV line from Luano to Solwezi in Zambia where a large copper mine was opened. With the construction of a 330kV line the transfer capability of the DRC-Zambia interconnector would increase from the present 260MW to over 800MW. The transmission line that will run from Solwezi in Zambia to Kolwezi in the DRC would be approximately 200 km. 5.5 Zambia – Namibia 60% of projects works were completed on the Zambian side including substation works at Victoria Falls. For the 3,5 km stretch of the AC line on the Namibian side, the Zambian Contractor was assigned to carry out the works. The EIA was completed on the Namibian side. The commissioning date was shifted from May 2006 to June 2006. The project would enable Namibia to have an alternative route for power imports. 5.6 Luano – Solwezi - Lumwana 330 kV line The second phase of the 65 km LuanoSolwezi- Lumwana 330 kV line in Zambia is aimed at supplying a new copper mine at Southern African Power Pool ANNUAL REPORT 2006 19
  • 20. Planning Sub-Committee Report 2005/6 Lumwana. The Power Purchase Agreement was already signed and the project would be commissioned in December 2007. With the Kolwezi - Solwezi 330 kV line complete the transfer capacity would be increased from the DRC to Zambia. 6. Technical Issues SAPP Transfer Limit Studies A special Study Group was set up to determine the transfer limits in the SAPP interconnected system. Transmission Congestion has been noted on some points in the system especially the transmission bottlenecks within the ZESA system in Zimbabwe, which geographically lies on the centre of SAPP. This bottleneck is hindering the electricity trade between the northern and southern countries. Special projects were identified to relieve the congestion. Counter trade in some hours is assisting to relieve congestion. Transmission Wheeling Charges SAPP successfully implemented the full rate for the wheeling charges on 1 January 2006. The rates were being increased every six months starting 1 January 2003. 7. Coordination Meeting of Power Pools SAPP has been active in different forums. A Coordination meeting of Power Pools was held in Addis Ababa, Ethiopia. It was attended by representatives from Southern, Central, Western and Eastern African Power Pools. The Union of Electric and Distributors of Electricity (UPDEA) arranged the meeting. 20 Mr Mbuso Gwafila Planning Sub Committee Chairperson Southern African Power Pool ANNUAL REPORT 2006
  • 21. Environmental Sub-Committee Report 2.5 Zambia – Namibia Inter-connector Environmental Impact Assessment as well as Environmental Management plans have been done for the project. Consultants are yet to undertake an in-depth study on birds at sensitive river crossings. Environmental monitoring of the implementation of the project is being done. Mr Vusumuzi F Simelane Environmental Sub-Committee Chairperson 1. Introduction. The year 2005/6 witnessed a lot of achievements in SAPP’s vision of ensuring sustainable energy developments through sound economic, environmental and social practices. 2. Evaluation of Environmental Impacts of SAPP Projects. 2.1 WESTCOR Activities for this project are proceeding according to plan. A Chief Operations Officer has been appointed. Environmental studies are to be done with the aid of satellite images (remote sensing techniques) and the ESC will be involved at all stages. 2.2 DRC – Zambia Inter-connector The survey works and the way leave acquisition have been completed. Compensation and relocations issues are being worked out in both countries. Environmental Management Plans for both the line and sub-station have been completed and will be part of the implementation contracts 2.3 Zambia – Tanzania – Kenya Interconnector 2.6 Lower Kafue – Gorge Power Station – 750 MW The EIA is yet to be submitted to the authorising agency. A site selection study has been completed and detailed design works are to commence. 2.7 Open Cycle Gas Turbines at Atlantis and Mossel Bay (SA) – 1000MW Construction works at both sites commenced on 17 and 24 January 2006 respectively. Actions have been taken to ensure compliance of conditions of approval. 2.8 Matimba Coal Fired Power Station (SA) The scoping report for Matimba B EIA has been issued to the authorities and the public for review. It is anticipated that final EIA will be submitted to authorities in May 2006 for the issuance of the Record of Decision. 2.9 Morupule Coal Fired Power Station (Botswana) – 400MW The scoping report for the project has been approved and the Terms of Reference for the EIA are being finalised. 21 Environmental Scoping has been done and the report is ready for review by authorising agencies. The Environmental Impact Assessment is to commence as soon as the Environmental Scoping report is approved. 2.4 Mozambique – Malawi Inter-connector Compensation evaluation is currently in progress in Malawi. Route pegging has been completed. Environmental Impact Assessment has not yet been done. Southern African Power Pool ANNUAL REPORT 2006
  • 22. Environmental Sub-Committee Report (Continued) 3. Working Groups • 3.1 Environmental Impact Assessment (EIA) Guidelines for Hydropower Projects A consultant (Nexant INC), was contracted to develop EIA Guidelines for Hydropower projects. The consultant has completed a draft report, which is scheduled to be presented to ESC members at a workshop to be held in South Africa during the month of June 2006. 3.2 Training Two Training Sessions were held during the period under review. Members received training on Social Impact Assessment and Triple Bottom Line Reporting and GRI Guidelines for Sustainability Reporting at Stellenbosch and Dar Es Salaam respectively. These sessions are useful as capacity building initiatives within ESC members. 3.3 SAPP Position on Climate Change The Management Committee approved the ESC document on Climate Change and agreed to have the document implemented in SAPP as per ESC proposal. 3.4 Negative Impacts of Climate Change The Research Project on Emission Factors (EFs) in the power sector in Southern Africa has achieved the following results to date: • 22 Fuel characteristics in four countries (South Africa, Tanzania, Zambia and Zimbabwe) • Plant characteristics of the region • EFs for each fuel quality considered • Additional measurements are to be undertaken in Botswana, Namibia and Mozambique 3.5 Guidelines on Environmental Management. The following Environmental Management Guidelines were approved by the Management Committee at the MANCO Meeting Held in Tanzania, on 1st march, 2006. Utilities were urged to use the guidelines. i. Guidelines on Management of Oil Spills ii. Guidelines on Management of Asbestos iii. Guidelines on Animal Interactions 3.6 Environmental Management Policy A Draft SAPP Environmental Management Policy was prepared and circulated to all utilities for comments and inputs. The Policy is expected to be finalised during the next SAPP ESC Meeting to be held in Zambia in September 2006. 3.7 Pool Plan Review The ESC made a presentation to the Management Committee on the role of the Strategic Impact Assessment to the Pool Plan. The Management Committee approved the inclusion of SEA into the SAPP Pool Plan under Environmental Scoping Study and at negotiation level with the selected consultant. 4.0 ESC Coordination A major milestone was the appointment of the Environmental Officer at the Coordination Centre in Harare. The major tasks for the EO is to provide strategic and operational direction to SAPP on environmental issues. Methodologies for treating flue gas measurements for coal, diesel and coal mining methane. Outstanding Issues on the Research are: • Developments of a publication for phase 1, 2 and 3 results for peer review and depositing EFs into IPCC database Southern African Power Pool ANNUAL REPORT 2006 Mr Vusumuzi F Simelane Environmental Sub-Committee Chairperson
  • 23. SAPP Co-ordination Centre Report Dr Lawrence Musaba Co-ordination Centre Manager Mr Alison Chikova Acting Chief Engineer Mrs Joyce Mutsau Finance & Admin Officer Mr Johnson Maviya Environmental Officer Mr Elisha Mutambudzi STEM Finance Officer Ms Daisy Mudangwe STEM Finance Officer Miss Caroline Ganyani IT Specialist 23 Mr Simon Jaricha Messenger Southern African Power Pool ANNUAL REPORT 2006
  • 24. SAPP Co-ordination Centre Report (Continued) 1. Introduction The activities of the SAPP Coordination Centre are funded by SAPP members through yearly contributions to the Coordination Centre budget. The activities of the Coordination Centre in the past year included, but were not limited to STEM operations and management, prioritisation of SAPP projects, organising REIC, system studies, competitive market development, ancillary services development and many other activities. The Coordination Centre successfully implemented the full wheeling rate on 1 January 2006. Over the past year the Coordination Centre actively disseminated information on the activities being undertaken to address the diminishing generation surplus capacity in SAPP. The Coordination Centre is focused to meet the SAPP challenges into the future. 2. Human Resources The SAPP Coordination Centre appointed Mr Johnson Maviya to the position of SAPP Environmental Officer with effect from 1 March 2006. Prior to his appointment, Mr Maviya worked as a Lecturer at the University of Bindura, Zimbabwe. He has a Masters degree in Environmental Policy and Management from the University of Zimbabwe. 24 Mr Johnson Maviya SAPP Environmental Officer 3. Host Country Agreement On 13 March 2006, the Government of Zimbabwe and the Southern African Power Pool (SAPP) signed a Host Country Agreement between the Government of Zimbabwe and SAPP for the hosting of the SAPP Coordination Centre in Harare, Zimbabwe. Signing on behalf of the Government of Zimbabwe was the Minister of Southern African Power Pool ANNUAL REPORT 2006 Energy and Power Development of Zimbabwe, Retired Lt. General Mike Nyambuya, and on behalf of SAPP was Dr Lawrence Musaba, the SAPP Coordination Centre Manager. Representatives from SADC countries such as Angola, Botswana, Malawi, Mozambique and Zambia graced the occasion. Other representatives included officials from the Royal Norwegian Embassy in Harare, ZESA Holdings, Zimbabwe Electricity Regulatory Commission, Ministry of Foreign Affairs and the Ministry of Energy and Power Development of Zimbabwe. The host country agreement would help the SAPP Coordination Centre: • To be fully recognized as a SADC Institution in Zimbabwe, • Achieve its stated aims, goals and objectives, • Reduce its operating costs and tax burden on member states, and • Receive support and donations from cooperating partners without difficulties. 4. Conferences and Workshops 4.1 IEEE PES Conference The IEEE Power Engineering Society in association with SAPP, the University of KwaZulu-Natal (UKZN) and the South African Institute of Electrical Engineers (SAIEE) hosted the inaugural 2005 conference and exposition in Africa in Durban, South Africa, from 11–15 July 2005. The conference consisted of four targeted panel sessions comprising invited papers from both local and international experts. The themes for the sessions were: energy development without impacting on global warming; extra long distance economical bulk power transmission; security and quality of supply in national and regional electricity markets; and, experiences in energy intensive industrial power consumption at the world’s lowest cost. The conference was covered by South African Broadcasting Corporation (SABC) and was
  • 25. SAPP Co-ordination Centre Report (Continued) televised on news hour. Dr Musaba and Mr Naidoo were both interviewed by SABC. experts in their chosen technical fields. The SAPP Coordination Centre presented two papers; one on the development of the competitive electricity market, and the other on the development of an ancillary services market. (Left to Right): Dr Lawrence Musaba, SAPP Coordination Centre manager; Dr Teddy Puttgen, President of the Power Engineering Society of IEEE and Mr Pat Naidoo, Senior General Manager of Eskom. In the closing plenary, the President of IEEE Power Engineering Society, Dr Teddy Puttgen, expressed delight on conference arrangements and technical discussions and called for the establishment of an IEEE Power Engineering Society to be chaired by Mr Pat Naidoo of Eskom. He also requested southern Africa to host a second conference in 2007. 4.2 Cigré Conference Cigré conference took place in Cape Town, South Africa, from 24–27 October 2005. Cigré, the International Council on Large Electric Systems, was established in 1921 and is a non-profit organization. It consists of specialist study committees with membership of experienced engineers from over 80 countries who provide practical inputs to identified study and problem areas. It is a forum for the exchange of information on experiences and development in the field of generation, transmission, and distribution. The aim of the Cigré Conference held in South Africa was to provide a platform for Cigré members and non-members alike to address the challenges in the Southern African region, and to network with world Dr L Musaba represented SAPP at the Cigré Conference. 4.3 Coordination Meeting of Power Pools in Africa A coordination meeting of the power pools in Africa was held at the African Union Headquarters in Addis Ababa on 22–24 March 2006 where presentations were made on the activities of the power pools. Mr Alison Chikova represented SAPP. Representatives attended the coordination workshop from the Central African Power Pool (CAPP), East African Power Pool (EAPP), Mr Alison Chikova Acting Chief Engineer Southern African Power Pool ANNUAL REPORT 2006 25
  • 26. SAPP Co-ordination Centre Report (Continued) Southern African Power Pool (SAPP), West African Power Pool (WAPP), and the Nile Basin Initiative. An inauguration meeting of Ministers responsible for Energy in Africa followed the workshop. 4.4 Annual Meeting between SAPP, Sida and the Norwegian Embassy The Annual General Meeting between SAPP, Sida and the Norwegian Embassy took place at the SAPP Coordination Centre in Harare on 21 April 2006. A detailed presentation on the power supply situation in SAPP was done highlighting the initiatives being undertaken by the SAPP to address the anticipated 2007 energy shortfall. All the parties expressed satisfaction at the way the competitive market development project and the transmission pricing and ancillary services market development projects were progressing. Incremental transmission losses reconciliation due to wheeling transactions was timeously done during the year under review including inadvertent energy reconciliation between the control areas. 5.2 Quality of Supply Data Base The Quality of Supply Working Group agreed on a piggy back on Day Ahead Market (DAM) System. The proposed new scope of implementation includes the following: • Installation of a quality of supply data base service as part of the DAM client side database system, • Configure SAPP QOS to load, store and display the cross-border interconnections, and • Design, build and test an integration adaptor between Eskom QOS data (for cross border inter-connectors), and the SAPP QOS database. Dr Lawrence Musaba SAPP Coordination Centre Manager Dr L Musaba represented SAPP at the 26th SAPP Meeting in Dar Es Salaam, Tanzania. 26 5. Technical Issues 5.1 Transfer Limits across SAPP The transfer limits across the SAPP interconnectors were updated after a special task force carried out a detailed analysis of the steady state and dynamic conditions of the SAPP interconnected system. Recommendations were put in place to alleviate transmission congestion and improve the transfer limits. Southern African Power Pool ANNUAL REPORT 2006
  • 27. Statistics 2005/6 Graph 1: SAPP Demand Supply Situation. Table 1: Key Statistics 2004/5 UTILTY (Peak Demand) MW/Employee Generation Sent Out GWh/Employee Number of Customers per Employee Energy Sales GWh/Employee ENE 0.934 0.623 34 0.62 BPC 2.076 0.467 73 1.43 SNEL 1.615 1.101 57 0.81 LEC 2.050 1.016 105 1.01 ESCOM 1.007 0.490 56 0.49 EDM 0.960 0.050 114 0.05 NamPower 5.511 1.863 4 3.77 11.267 7.475 127 7.33 SEB 2.579 0.155 73 1.53 TANESCO 1.093 0.756 113 0.77 ZESCO 3.487 2.329 78 2.31 ZESA 3.485 1.584 94 1.99 ESKOM Southern African Power Pool ANNUAL REPORT 2006 27
  • 28. Statistics 2005/6 (Continued) Graph 2: Number of Customers per Employee 2005/6 UTILTY Number of Customers per Employee ENE 34 BPC 73 SNEL 57 LEC ESCOM EDM NamPower ESKOM SEB TANESCO 105 56 114 4 127 73 113 ZESCO ZESA Graph 3: Performance Analysis 2005/6 28 Southern African Power Pool ANNUAL REPORT 2006 78 94
  • 29. Statistics 2005/6 (Continued) Graph 4: Peak Demand Growth 2005/6 Table 2: Utility General Information April 2005 to March 2006 Country Utility Installed Maximum MD Capacity Demand Growth Sales Sales Growth Number of Number of Generation Customers Employees Sent Out Net Imports GWh GWh 2,649 0 MW MW % GWh % 9 Angola ENE 745 397 1,843 12,7 143,937 4,250 Botswana BPC 132 434 7,96 2583,7 7,5 152,744 2,091 DRC SNEL 2,442 4,656 13 360,329 6,268 6,904 Lesotho LEC Malawi ESCOM 1012 2,53 977 2,006.50 TransNet mission Exports System losses GWh % 0 25 0 10,96 Revenue Debtor Rate of Net US$ Days Return Income Million USD % Million 87,94 82 n/a -18,58 121,8 37,79 -2,35 22 n/a 0 1,800.00 6,3 149,2 n/a n/a 72 90 0 354 12 46,173 439 446 8 11 20 25,6 57 -0,9 -0,96 285 242 6,5 970 4 135,000 2,400 1,177 0 0 19 5,319 110 1 2,218 Mozambique EDM 233 285 7,1 1,308 11,8 338,597 2,969 147,418 1,501 1,496 5 110,9 64 Namibia 393 491 6,51 2,976 6,5 3,403 1,660 1,703.0 0 8 169 8,730 13,107 8,9 NamPower South Africa ESKOM Swaziland SEB Tanzania TANESCO Zambia Zimbabwe 42,011 33,461 -2,2 207,921 0,8 3,758,569 891 29,697 221,985 n/a n/a 34 0,97 10,4 5,388 22 8,4 592 51 172 1 852,8 2,5 48,500 667 103,5 916,8 0 16 59,7 85 4,5 5,1 839 531 4,3 2,549 10,3 550,863 4857 3674 43 0 24 188 92 n/a n/a ZESCO 1,732 1,330 2,8 8,457 3,1 297,000 3,814 8,884 0 69 3,6 217,6 207 n/a n/a ZESA 1,975 2,066 -0,1 10,480 3,5 559,766 5,928 9,391 2,666 255,5 12,6 29,463 33 -23 -372 Southern African Power Pool ANNUAL REPORT 2006 29
  • 30. Statistics 2005/6 (Continued) Table 3: Annual Maximum Demand – MW April 2005 to March 2006 HISTORIC FORECAST YEAR 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Angola 209 326 250 291 330 342 374 397 846 871 898 924 952 981 1010 Botswana 239 256 285 337 362 393 402 434 452 479 507 534 562 591 609 DRC 830 841 895 929 991 994 1012 1012 1,070 1,100 1,138 1,172 1,207 1,244 1281 Lesotho 69 77 85 88 89 90 90 90 115 125 130 136 142 148 152 Malawi 190 185 205 212 236 261 227 242 311 330 350 371 394 414 426 Mozambique 245 214 231 234 250 258 266 285 305 326 349 374 400 428 441 Namibia 292 314 320 335 362 371 393 491 670 681 692 703 713 724 746 South Africa 27,803 27,813 29,188 30,599 31,621 30,154 34,195 33,461 35,100 36,200 37,032 38,144 39,288 40,467 41681 Swaziland 145 153 154 159 160 172 171,5 172 185 191 196 202 208 215 221 Tanzania 368 394 426 465 474 506 509 531 654 700 747 786 873 910 937 Zambia 1,126 1,069 1,085 1,087 1,118 1,255 1,294 1,330 1,374 1,399 1,426 1,499 1,529 1,560 1606 Zimbabwe 1,950 2,034 1,986 2,013 2,028 2,007 2,069 2,066 2,208 2,287 2,363 2,446 2,527 2,610 2688 Total Interconnected 32,699 32,771 34,229 35,781 36,981 35,694 39,893 39,341 41,479 42,788 43,832 45,209 46,576 47,986 49,426 Total SAPP 33,466 33,676 35,110 36,749 38,021 36,803 41,003 40,511 43,290 44,689 45,827 47,290 48,795 50,291 51,800 Table 4: Annual Generation Sent Out – GWh April 2005 to March 2006 HISTORIC FORECAST YEAR 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Angola 1,319 1,516 1,104 1,840 1,866 1,993 2,344 2,649 2,870 3,090 3,320 3,665 3,820 3,935 3,935 Botswana 1,645 1,880 2,043 2,150 2,282 2699,8 977 2,717 2,880 3,054 3,237 3,431 3,637 3,637 N/A N/A N/A N/A 5,907 6,084 6,904 6,904 6,648 6,848 7,053 7,264 7,482 7,707 7,707 Lesotho 271 267 427 393 378 429 428 446 490 512 528 554 576 600 600 Malawi 1,023 1,087 902 1,091 1,134 1,177 1,177 1,177 1,327 1,380 1,435 1,492 1,552 1,614 1,614 Moxambique 30 1,543 DRC 1,076 1,186 1,212 1,257 1,307 1,392 102,2 147,418 158 169 181 193 207 221 237 Nambia 1,881 1,676 1,978 2,016 2136 1,421 1,379 4,400 4,456 4,512 4,567 4,623 4,679 4,679 South Africa 185,583 188,475 194,601 198,790 207,233 210,112 210,218 221,985 234,555 240,377 251,834 256,013 261,458 267,955 267,955 Swaziland 718 760 820 847 765 991 Tanzania 2,096 2,240 2,394 2,654 2,708 3,052 3674 Zambia 7,868 7,656 7,798 8,152 8,308 8,466 11,529 12,811 12,090 11,972 8,587 8,799 Zimbabwe 1,660 1005 1000,9 979 1,008 1,039 1,070 1,102 1,135 1,135 3674 3,556 3,782 4,025 4,238 4,820 5,021 5,021 8,512 8,884 8,974 9,209 9,373 9,542 9,728 10,224 10,224 9,719 9,391 12,937 13,349 13,800 14,295 14,777 15,271 15,779 Total Interconnected 210,469 214,476 220,806 225,470 236,771 239,976 239,210 251,395 271,857 278,808 291,373 296,735 303,384 311,429 311,953 Total SAPP 214,907 219,319 225,206 231,055 242,479 246,198 246,405 258,895 279,610 287,060 300,153 306,130 313,576 321,999 322,523 Southern African Power Pool ANNUAL REPORT 2006
  • 31. Report of the Independent Auditors TO THE MEMBERS OF SOUTHERN AFRICAN POWER POOL We have audited the annual financial statements set out on pages 32 to 40 for the year ended 31 March 2006. 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. We believe that out audit provides a reasonable basis for our opinion. 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 2006 and of the results of its operations and cash flows for the year then ended in conformity with International Financial Reporting Standards. Ernst & Young Chartered Accountants (Zimbabwe) HARARE 10 May 2006 31 Southern African Power Pool ANNUAL REPORT 2006
  • 32. Statement of Accounting Policies The following principal accounting policies have been consistently applied throughout the period: ACCOUNTING CONVENTION The financial statements are prepared under the historical cost convention. No procedures are adopted to reflect the impact on the financial statements of specific price changes or changes in the general level of prices. CURRENCY The financial statements are expressed in United States dollars. Assets and liabilities are translated to the relevant currencies at the exchange rate ruling on the balance sheet date, income and expenditure items are translated at the ruling average monthly rates for the period to which they relate. Realised exchange differences are taken to the income statement in the year in which they arise. Surpluses and deficits on translation are dealt with in the income statement in the determination of net income. DEPRECIATION Fixed assets are depreciated over their expected useful lives on a straight line basis as follows:Computer equipment Office equipment Office furniture and fittings – – – 3 years 5 years 10 years The carrying amounts of fixed assets are reviewed at each balance sheet date to assess whether they are recorded in excess of their receivable amounts and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount. SPECIAL FUND Funds granted for specific purposes are not included in the income and expenditure account, but are accounted for separately as Special Fund on the balance sheet. They are maintained in a separate bank account and any interest earned on the unused funds is credited to the Special Fund. PROVISIONS Provisions are recognised when the Organisation has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amounts of the obligation. RETIREMENT BENEFIT COSTS Retirement benefits are provided for the organisation employees through the National Social Security Authority (NSSA) scheme. Employer’s contributions to the NSSA scheme are charged to the income statement when due. REVENUE RECOGNITION 32 Funds Income Income received is based on a set budget agreed upon by all members of the organisation and contributions made by members are based on set percentages and proportions based on electricity usage. The income is brought to account per issued invoice to each of the member countries. Interest Revenue is recognised as the interest accrues. STATEMENT OF COMPLIANCE The financial statements of Southern African Power Pool have been prepared in accordance with International Financial Reporting Standards (IFRS’s). Southern African Power Pool ANNUAL REPORT 2006
  • 33. Income Statement For the Year Ended 31 March 2006 Notes 2006 US$ 2005 US$ 121 085 69 000 Imported energy 45 407 69 000 Exported energy 45 533 – Peak demand 30 145 46 000 Thermal rating 30 271 23 000 Host member 30 271 23 000 Short Term Energy Market 31 810 51 482 Non-member participation fees 29 940 30 000 364 462 311 482 Anniversary celebrations 50 000 – Special fund – Telecoms Project 15 000 392 409 Sundry income 11 725 6 980 (19 069) (2 013) INCOME OPERATING INCOME Operating members OTHER INCOME/EXPENSES Foreign exchange loss Foreign exchange difference on fixed assets 115 31 436 237 453 669 Profit on disposal of fixed assets 9 856 – Interest received – 718 951 EXPENDITURE Administration expenses 2 442 549 737 453 (DEFICIT)/SURPLUS FOR THE YEAR TRANSFERRED TO ACCUMULATED FUND 3 11 120 (18 502) 33 Southern African Power Pool ANNUAL REPORT 2006
  • 34. Balance Sheet As at 31 March 2006 Notes 2006 US$ 2005 US$ 217 691 231 571 699 445 1 651 155 416 143 100 000 72 805 – – 75 000 68 518 139 470 3 152 952 518 846 6 20 709 29 213 7 33 923 148 225 331 577 268 603 699 445 1 651 155 416 143 72 805 – – 3 152 952 518 846 FUNDS AND LIABILITIES FUNDS Accumulated funds Special funds – Norwegian Government Grant – Botswana – Norwegian Government Grant – Norway – Sida Grant General reserve 3 4 4.1 4.2 4.3 CURRENT LIABILITIES Accounts payable 5 TOTAL LIABILITIES ASSETS NON-CURRENT ASSETS Property, plant and equipment CURRENT ASSETS Accounts receivable Cash at bank and on hand – Co-ordination centre funds – Special fund – Norwegian Government Grant – Botswana – Norwegian Government Grant – Norway – Sida Grant TOTAL ASSETS L Chilimanzi Co-ordination Centre Board Chairperson 34 L Musaba Co-ordination Centre Manager 10 May 2006 Southern African Power Pool ANNUAL REPORT 2006
  • 35. Cash Flow Statement For the Year Ended 31 March 2006 Notes NET CASH INFLOW FROM OPERATING ACTIVITIES 1 2006 US$ 2005 US$ 34 104 11 329 RETURNS ON INVESTMENTS Interest received Interest paid 31 436 – 9 856 (319) (3 029) 461 (4 751) 237 3 637 501 (943 561) – (470 911) 2 756 912 (454 559) INVESTING ACTIVITIES Capital expenditure Disposal of fixed assets FINANCING ACTIVITIES Grants received Grants utilised/remitted INCREASE/(DECREASE) IN CASH RESOURCES 2 NOTES TO THE CASH FLOW STATEMENT 1. NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES This is arrived at as follows: Surplus/(deficit) for the year Depreciation Interest receivable Interest payable (Increase) in accounts receivable Increase in provisions (Decrease)/increase in accounts payable Profit on sale of fixed assets 11 120 11 187 (31 437) – 114 302 9 434 (80 387) (115) (18 502) 15 758 (9 856) 319 (95 261) 41 362 77 746 (237) 34 104 11 329 341 408 3 098 320 795 967 341 408 2 756 912 (454 559) 2. (DECREASE)/INCREASE IN CASH RESOURCES The (decrease)/increase in cash resources is represented by a movement in balances, as follows: At 1 April 2005 At 31 March 2006 Southern African Power Pool ANNUAL REPORT 2006 35
  • 36. Notes to the Financial Statements For the Year Ended 31 March 2006 1. ACTIVITIES The main object of the organisation is to co-ordinate the planning and development of electricity interconnections between members’ respective networks and to expand the Interconnected Power System and electricity trading in the region. 2006 US$ 2005 US$ 895 828 2. ADMINISTRATION 36 Cleaning Audit fee – current year annual audit – prior year charge – STEM review Advertising and promotions Bank charges Computer expenses Courier and postage Depreciation Entertainment General expenses Insurance Interest paid Legal fees Leave pay expenses Leasing and hiring costs Magazines and books SAPP Anniversary Celebrations and other costs Printing and stationery Recruitment and relocation Rent paid Repairs and maintenance Salaries and wages Staff expenses Staff training Subscriptions Sundry expenses Telephone and fax Internet Travel and accommodation Withholding tax on interest Reports and periodicals Telecommunications – VSAT Project Telecommunications – Training 8 750 (421) 6 250 – 14 688 1 974 4 718 11 187 70 659 1 669 – 265 6 392 274 168 51 086 1 182 1 501 17 394 443 222 660 335 1 648 1 678 2 300 3 679 4 565 46 620 – 16 670 – 13 250 8 788 2 430 2 944 438 14 693 3 086 6 602 15 758 379 – 2 477 319 – – – 50 – 2 211 656 12 500 1 198 194 862 292 1 737 405 2 387 7 519 6 092 45 223 5 7 446 396 128 TOTAL ADMINISTRATION EXPENSES 442 549 737 453 At 1 April 2005 Surplus/(deficit) for the year Transfer to General Reserve 231 571 11 120 (25 000) 275 073 (18 502) (25 000) At 31 March 2006 217 691 231 571 3. ACCUMULATED FUND Southern African Power Pool ANNUAL REPORT 2006
  • 37. Notes to the Financial Statements (Continued) For the Year Ended 31 March 2006 2006 US$ 2005 US$ 4. SPECIAL FUNDS 4.1 NORWEGIAN GOVERNMENT GRANT – BOTSWANA Balance as at 1 April 2005 72 805 Advance 934 652 Payments: (314 943) Nordpool Consulting Nordpool Consulting Nordpool Consulting Norwegian Water Resources Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Norwegian Water Resources Norwegian Water Resources Nordpool Consulting Nordpool Consulting Nordpool Consulting Norwegian Water Resources Nordpool Consulting 04.05.05 17.05.05 29.06.05 30.06.05 27.07.05 04.08.05 01.09.05 04.10.05 11.10.05 14.11.05 18.11.05 11.01.06 24.01.06 13.02.06 20.02.06 15.03.06 Bank charges Interest received (569) 7 500 Balance as at 31 March 2006 699 445 Balance as at 1 April 2004 Additional advance 543 716 04.10.04 Payments: Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Shaw Technologies Incorporation (Planning Software) Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Norwegian Water Resources Bank charges Interest received Balance as at 31 March 2005 (35 302) (35 303) (35 303) (16 594) (29 492) (35 303) (25 000) (25 000) (12 500) (11 128) (1 196) (12 500) (12 500) (12 500) (2 822) (12 500) 297 937 (769 612) 21.04.04 28.05.04 08.06.04 07.07.04 06.08.04 09.09.04 (75 465) (63 848) (65 500) (64 187) (62 200) (61 307) 29.10.04 04.10.04 22.11.04 20.12.04 04.01.05 07.02.05 02.03.05 24.03.05 17.11.04 (69 250) (61 307) (63 228) (52 007) (35 303) (35 303) (35 303) (17 069) (8 337) (477) 1 241 72 805 Southern African Power Pool ANNUAL REPORT 2006 37
  • 38. Notes to the Financial Statements (Continued) For the Year Ended 31 March 2006 2006 NOK 4 2006 US$ 12 000 000 1 791 903 SPECIAL FUNDS (continued) 4.2 NORWEGIAN GOVERNMENT GRANT – NORWAY Balance as at 1 April 2005 Advance 08.12.05 Payments: (1 099 335) (162 469) Nordpool ASA Bank charges Bank charges Bank charges Bank charges Bank charges Bank charges Bank charges Bank charges 14.03.06 01.08.06 01.09.06 05.10.05 01.11.05 01.12.05 02.01.06 01.02.06 01.03.06 (1 098 575) (200) (80) (80) (80) (80) (80) (80) (80) – (31) (13) (12) (12) (12) (12) (12) (12) Interest charges 31.12.05 (14) (2) Interest received Rate variance 31.12.05 30.03.06 875 20 848 10 906 506 Balance as at 31 March 2006 5 855 – 1 651 155 The goal of the project funded by the Norwegian Government is to provide least cost, environmentally friendly and affordable energy and increase accessibility for rural areas in Southern Africa through the development of a competitive electricity market. The project is expected to run until 2007. 2006 SEK 2006 US$ 4.3 Sida GRANT Balance as at 1 April 2005 Advance 03.06.05 3 999 999 533 860 Additional advance 21.02.06 2 825 347 377 085 (3 726 734) (497 389) (66 819) (612 168) (299 282) (238 312) (674 937) (546 007) (634 481) (240 602) (414 126) (8 918) (81 703) (39 944) (31 806) (90 081) (72 873) (84 681) (32 112) (55 271) (5 336) 24 719 (712) 3 299 Payments: 38 Power Planning Associates Power Planning Associates Power Planning Associates Power Planning Associates Power Planning Associates Power Planning Associates Power Planning Associates Power Planning Associates Power Planning Associates Bank charges Interest received Balance as at 31 March 2006 12.07.05 04.08.05 07.09.05 05.10.05 16.11.05 14.12.05 14.12.05 02.02.06 14.03.06 3 117 995 416 143 The goal of the project funded by Sida is the development of a long term transmission pricing policy, implementation procedures and ancillary services market development for the Southern African Power Pool. The project is expected to run until 2007. Southern African Power Pool ANNUAL REPORT 2006
  • 39. Notes to the Financial Statements (Continued) For the Year Ended 31 March 2006 2006 US$ 2005 US$ 31 649 22 215 30 872 5 997 30 872 86 383 68 518 139 470 46 736 42 142 45 091 36 992 4 594 8 099 20 000 19 631 20 000 18 245 369 1 755 Office furniture and fittings Cost Aggregate depreciation 35 422 19 675 35 422 16 063 Net book value 15 747 19 359 102 158 81 449 100 513 71 300 20 709 29 213 29 213 40 220 3 029 – 3 866 885 3 029 4 751 6 189 1 386 3 612 8 182 3 971 3 605 11 187 15 758 346 – 20 709 29 213 5. ACCOUNTS PAYABLE Provisions United States Agency for International Development (USAID) Other creditors 6. PROPERTY, PLANT AND EQUIPMENT 6.1 Summary Computer equipment Cost Aggregate depreciation Net book value Office equipment Cost Aggregate depreciation Net book value Total Cost Aggregate depreciation Net book value 6.2 Movements for the year Net book value of total property, plant and equipment at 1 April 2005 Capital expenditure – at cost Computer equipment Office furniture and fittings Depreciation Computer equipment Office equipment Furniture Disposals – at net book value Computer equipment Net book value of total property, plant and equipment at 31 March 2006 Southern African Power Pool ANNUAL REPORT 2006 39
  • 40. Notes to the Financial Statements (Continued) For the Year Ended 31 March 2006 2006 US$ 2005 US$ 18 922 6 939 8 062 132 164 14 371 1 690 33 923 148 225 7. ACCOUNTS RECEIVABLE Trade debtors Prepayments Other debtors 8. RELATED PARTY TRANSACTIONS W Balet Transaction Sale of computer 40 Southern African Power Pool ANNUAL REPORT 2006 Relation Ex. Senior Advisor Amount US$ 461,40

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