Southern African Power Pool 2009 annual report


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Southern African Power Pool 2009 annual report

  1. 1. 2009 ANNUAL REPORT Developing a Regional Competitive Developing a Regional Competitive and Sustainable Electricity Market and Sustainable Electricity Market
  2. 2. CONTENTS Vision and Objectives 2 Organogram and Members 3 About SAPP 4 Highlights 5 SAPP Executive Committee 7 Executive Committee Chairman’s Report 8 Management Committee 12 Operating Sub-Committee 15 Environmental Sub-Committee 21 Planning Sub-Committee 24 Markets Sub-Committee 26 SAPP Co-ordinating Centre Report 28 Year 2007 Statistics 31 Report of the Independant Auditors 35 Financial Statements 39 Income Statement 39 Balance Sheet 40 Cash Flow Statement 41 Notes to the Financial Statements 42 Developing a Regional Competitive Developing a Regional Competitive and Sustainable Electricity Market and Sustainable Electricity Market 1
  3. 3. VISION & OBJECTIVES Vision Mission • Facilitate the development of a competitive Aim to provide the least cost, environmentally friendly electricity market in the SADC region. and affordable energy and increase accessibility to rural communities. • 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 Strategy users. To be the most preferred region for investment for • Ensure sustainable energy developments through value for money by energy intensive users. sound economic, environmental and social practices. Values • Respect for others and develop mutual trust. Objectives • Honesty, complete fairness and integrity in dealing • Provide a forum for the development of a world with issues. class, robust, safe, efficient, reliable and stable • Selfless discharge of duties. interconnected electrical system in the southern • Full accountability to the organisation and its African region. stakeholders. • Coordinate and enforce common regional • Encourage openness and objectivity. 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
  4. 4. ORGANOGRAM & MEMBERS Organogram SADC Directorate of Infrastructure and Services Executive Committee Management Committee Environmental Sub-Committee Markets Sub-Committee Co-ordination Centre Board Operating Sub-Committee Planning Sub-Committee Co-ordination Centre SAPP Membership Full Name of Utility Status Abbreviati on Country Botswana Power Corporation OP BPC Botswana Electricidade de Mocambique OP EDM Mozambique Electricity Supply Corporation of Malawi NP ESCO M Malawi Empresa Nacional de Electricidade NP ENE Angola ESKOM OP Eskom South Africa Lesotho Electricity Corporation OP LEC Lesotho NAMPOWER OP Nam Power Namibia Societe Nationale d’Electricite OP SNEL DRC Swaziland Electricity Company OP SEC Swaziland Tanzania Electricity Supply Company Ltd NP TANESCO Tanzania ZESCO Limited OP ZESCO Zambia ZESAHoldings Private Limited ZESA Holdings Private Limited OP ZESA Zimbabwe OP = Operating Member NP = Non-Operating Member 3
  5. 5. ABOUT SAPP • The SAPP was created in August 1995 at the SADC • The SAPP has twelve member countries summit held in Kempton Park, South Africa, when represented by their respective electric power member governments of SADC (excluding utilities organised through SADC. Mauritius) signed an Inter-Governmental Memorandum of Understanding for the formation of • The SAPP has four working committees: the an electricity power pool in the region under the Environmental Sub-Committee, the Markets Sub- name of the Southern African Power Pool. The Committee, the Operating Sub-Committee and the ministers responsible for energy in the SADC Planning Sub-Committee under a Management region signed the Revised Inter-Governmental Committee which in turn reports to the Executive Memorandum of Understanding on 23 February Committee. The Markets Sub-Committee is a new 2006. sub-committee that was created in April 2007 following the signing of the Revised Inter-Utility • The SAPP is governed by four agreements: the Inter-Governmental Memorandum Memorandum of Understanding by the SAPP of Executive Committee on 25 April 2007. Also Understanding which enabled the establishment of created in April 2007 is the Coordination Centre SAPP; the Inter-Utility Memorandum of Board to govern the activities of the SAPP Understanding, which established SAPP's basic Coordination Centre. management and operating principles; the Agreement Between Operating Members which • The SAPP coordinate the planning and operation of established the specific rules of operation and the electric power system among member utilities. pricing; and the Operating Guidelines, which • The SAPP provide a forum for regional solutions to provide standards and operating guidelines. The electric energy problems. Revised Inter-Utility Memorandum of Understanding was signed on 25 April 2007 and • The SAPP established the Short-Term Energy The Revised SAPP Agreement Between Operating Market in April 2001. From January 2004, the SAPP Members was signed in April 2008, The Operating started the development of a competitive electricity Guidelines are under review. market for the SADC region. The new market is in the form of a Day-Ahead Market (DAM). 4
  6. 6. HIGHLIGHTS and discussions aimed at ensuring that the World Cup is seen as a triumph for the entire African continent. The main achievements for the period under review were as follows: 1. 4. Visit to China Investors Roundtable SADC in conjunction with the SAPP and the Regional Electricity Regulators Association (RERA) hosted the Investors Roundtable in Livingstone, Zambia, from 15-17 July 2009. The aim of the Roundtable was to showcase a collection of SAPP priority projects that could reach financial closure in the next two to three years and to bring together Investors, Financiers, Developers, Project Owners and EPC Contractors and discuss common challenges being faced in the implementation of priority projects in the SADC region. A SAPP delegation comprising of Members of the Executive Committee and some members of the Management Committee visited China from 17-27 November 2008. The SAPP was looking to develop a business relationship with Chinese companies, manufacturers and suppliers of equipment, and to study and understand how China was planning and expanding her power network considering the massive economic development that China was undergoing. 5. 2. Commissioned Generation Projects and end of Power Conservation Program The SAPP received financial support from the Government of Norway and Sida (Sweden) to implement a competitive market in the form of a Day-Ahead Market (DAM). For the most of 2009, market trials were carried out and most Operating Members participated in the market trials. The four issues that prevented the timeous opening of the market were dealt with by the various Sub-Committees and the issues were: During the year up to December 2008, the SAPP commissioned a total of about 1,442MW of generation capacity as follows: South Africa 962 MW Swaziland 20 MW Tanzania 100 MW Zambia 60 MW Zimbabwe 300 MW · Internet access to the DAM Trading Platform housed at the SAPP Coordination Centre (SAPPCC) in Harare, Zimbabwe. The SAPP-CC managed to negotiate for an increased bandwidth and the system is now readily accessible to all Members. The projects in South Africa were mainly return-to-service of existing plants. In Zambia and Zimbabwe it was mostly rehabilitation of the existing power stations. In Swaziland and Tanzania, the commissioned generation was Greenfield. In 2009, the SAPP is planning to commission another 2,207 MW. · Treatment of imbalance energy. A Task Force consisting of members from the Markets and Operating Sub-Committees developed an interim solution that was implemented from 1 April 2009. The interim arrangement is subject to review on a quarterly basis. There was demand reduction in 2008/9 due to the credit crunch around the world that also affected the SAPP. The 2008 peak demand for the total SAPP was 43,267MW and the available capacity was 49,089MW. Taking into consideration the 10.2% reserve margin requirement for the SAPP, the SAPP therefore had a surplus of 969MW as at April 2009. 3. Implementation of a Competitive Market · Market surveillance. The Markets Sub-Committee agreed to an interim arrangement that nominated the SAPP-CC Manager as the responsible party to carry out market surveillance and monitoring. · Signing of market documentation. At a Meeting of the SAPP Executive Committee that was held during the year, all the SAPP Operating Members had agreed to sign the DAM Book of Rules and the Legal Participation documents before end of the year so that the market could go-live. It requires at least three Operating Members to sign the said documents for the market to start. Support to South Africa to host the FIFA 2010 World Cup All power utilities within the SADC region signed the pledge to support South Africa and the 2010 FIFA World CupTM in areas of Generation, Transmission, Customer Contributions and Demand Side Management initiatives. The pledge is the culmination of several months of planning 6. Completion of SAPP Reforms During the year, all SAPP Members signed the revised 5
  7. 7. HIGHLIGHTS 8 Inter-Utility MOU. SNEL of the DRC were the last Member to sign the document in November 2008. In an attempt to use power efficiently and reduce demand on the interconnected SAPP grid, the SAPP embarked on a project to replace incandescent bulbs with energy saving bulbs commonly known as Compact Fluorescent Lamps (CFLs). However, concerns were raised about the presence of mercury in the CFLs, which is a highly toxic heavy metal with severe human health adverse effects. The SAPP therefore developed draft guidelines on the use and disposal of these CFLs in a manner that would not compromise human health. The review of the Agreement Between Operating Members (ABOM) was completed during the year and was signed by all the SAPP Operating Members. The only base document that was still under review is the Operating Guidelines. It is expected that the Revised Operating Guidelines will be signed in 2010. 7. CFLs Disposal Guidelines Completion of the Review of the SAPP Pool Plan Nexant, the consultant appointed by the SAPP with grant funding coming from the World Bank, completed the final report on the review of the SAPP Pool Plan. The SAPP is yet to determine a way forward in the promotion and marketing of the projects identified in the Revised Pool Plan. 6
  8. 8. SAPP EXECUTIVE COMMITTEE Mr. Jacob Raleru BPC Mr. Manuel Cuambe EDM Mr. Peterson Zembani ESCOM Mr. Edward Nelumba ENE Mr. Jacob Maroga Eskom Mr Francis Hloaele LEC Mr. Paulinus Shilamba NamPower Dr. Idris Rashid TANESCO Mr. Pius Gumbi SEB Mr. Rhodnie P. Sisala ZESCO 7 Mr. Ben Rafemoyo ZESA
  9. 9. EXECUTIVE COMMITTEE CHAIRMAN’S REPORT Mr. Rhodnie Paul Sisala ZESCO (Zambia) Executive Committee Chairperson The Southern African Power Pool (SAPP) made tremendous progress in the supply of power to the interconnected grid and also organized an Investors Roundtable aimed at attracting investment into the SADC power sector. 1. Zambia and Zimbabwe they were rehabilitation projects, whereas in Swaziland and Tanzania they were Greenfields. In 2009, the SAPP expects to commission a total of 2,207MW of new generation as shown in Table 2. Because of the generation projects that were commissioned and the reduced demand on the SAPP grid, the SAPP recorded a surplus of 969MW as at April 2009 after taking into consideration reserve margin requirement of 10.2%. Power Supply Challenges 1.1 Peak demand and installed capacity The SAPP demand was 43,267MW and the installed capacity increased slightly to 55,927MW from previously 54,084 MW. The increase in the installed capacity was attributed to the projects that were commissioned in 2008 and in 2009. 2. SAPP Visit to China A SAPP delegation comprising of the Executive Committee and some members of the Management Committee visited China from 17-27 November 2008. The objectives of the visit were: § develop a business relationship with Chinese To companies, manufacturers and suppliers of equipment. § To study and understand how China was planning and expanding her power network considering the massive economic development that China was undergoing. § To explain the investment opportunities that exist in the SADC region to China and to work together with China to achieve the SADC regional objectives. The SAPP visit to China covered the visit to the ThreeGorges, State Grid Corporation of China DC-Engineering Construction Company, HVDC Projects and HVDC Technology, Transformer Manufacturing Company and Research Institutes. Left to right: Mr. Tony Ramos of ENE in Angola, The Minister of Energy of the DRC shaking hands with Dr. Musaba, Mr. M. Kitakani of SNEL making the introductions 1.2 Commissioned Projects in 2008 The SAPP visit to China was sponsored and hosted by the State Grid Corporation of China (SGCC). In 2008, the SAPP commissioned a total of 1,442MW as shown in Table-1. In South Africa, the commissioned projects were mostly return to service (RTS), whilst in The visit by SAPP to China was the first of its kind and the 8
  10. 10. EXECUTIVE COMMITTEE CHAIRMAN’S REPORT two parties (SAPP and SGCC) plan to develop a mutual and beneficial relationship. As a follow up to the SAPP visit, SGCC has been invited to visit SAPP in 2009. backed by commercial agreements to be negotiated and signed separately between SAPP members and Eskom and include initiatives that will ensure a targeted amount of power supplied, to be green power. Some key parts of the agreement include ensuring adequate transmission capacity for the transfer of power to South Africa, preventative pre-event maintenance and clean servitudes, maximizing plant production, energy efficiency initiatives and load management during the events. SAPP members will also engage in demand-side initiatives and manufacturers will be encouraged to slow production during the evening peak and optimize production during the off peak periods. Some may also elect to take their plants off the grid for planned maintenance during game times, thus reducing pressure on the interconnected SAPP system. SAPP officials pose for a photo in China The surplus power intervention would ensure that any surplus power capacity that SAPP members may have would be made available to Eskom as a contribution towards the 2009 and 2010 events. 4. Investors Roundtable SADC in conjunction with the SAPP and the Regional Electricity Regulators Association (RERA) hosted the Investors Roundtable in Livingstone, Zambia, from 15-17 July 2009. The aim of the Roundtable was to showcase a collection of SAPP priority projects that could reach financial closure in the next two to three years and to bring together Investors, Financiers, Developers, Project Owners and EPC Contractors and discuss common challenges being faced in the implementation of priority projects in the SADC region. Left to right: Dr Chen of Eskom, Mr Sisala, Chinese Official and Host and Mr. Gumbi displaying a gift received from the host 3. SAPP Pledge to support South Africa's host for the FIFA 2010 World Cup The main recommendations arising from the Roundtable were as follows: At a meeting of the SADC Energy Senior Government Officials and the SAPP Executive Committee meetings that took place in Maputo, Mozambique, on 27 April 2009, the SAPP signed the pledge to support South Africa and the 2010 FIFA World CupTM in areas of Generation, Transmission, Customer Contributions and Demand Side Management initiatives. The pledge is the culmination of several months of planning and discussions aimed at ensuring that the World Cup is seen as a triumph for the entire African continent. 2.1 Project Development A Project Implementation Team be set up for Interconnectors, a National level Project Development Framework be established in each country and a Project Acceleration Unit be set up at regional level. 2.2 Revolving Risk Capital Bridging Facility A facility should be set up and administered by a regional DFI (such as the Development Bank of Southern Africa, DBSA) to provide risk capital funding for the “pilot” list of projects to overcome the equity problem faced by power utilities. These funds would be refinanced, e.g. at COD, The initiative is part of Eskom's plans to ensure the reliability of electricity supply for the 2009 Confederations CupTM and the 2010 FIFA World CupTM. The pledge of solidarity among the Southern African countries will be 9
  11. 11. EXECUTIVE COMMITTEE CHAIRMAN’S REPORT and applied to the next ready project. 2.3 Regional Regulation Regional regulatory environments move towards being more compatible, drawing on lessons learnt from the structure within ECOWAS. Standardization of power purchase agreements (PPA) terms where possible was encouraged, thereby leaving negotiations to focus only on project specific elements. 2.4 Enhanced Buyer Model The current single buyer model be enhanced to allow intensive energy users to underwrite power projects directly, thereby relieving Utilities of the burden of having all regional projects coming to them for a PPA. The SAPP Executive Committee is reviewing the recommendations which if accepted, a way forward would be developed. The SAPP, working in conjunction with DBSA, SADC Secretariat and RERA have agreed to a close-out meeting to be held before end of year 2009 in order to develop a roadmap on the implementation of the recommendations, where applicable. 5. Acknowledgement I would like to take this opportunity and thank the members of the SAPP Executive Committee for the support that I received as Chairperson of the SAPP Executive Committee during my tenure of office. I would also like to thank Mr Manuel Cuambe, the previous Chairperson who worked tirelessly hard to make the projects implemented within the SAPP. Mr. Rhodnie P. Sisala Chairperson, SAPP Executive Committee 10
  12. 12. EXECUTIVE COMMITTEE CHAIRMAN’S REPORT Table 1: Commissioned Projects in 2008 No Utility Country Name Type Units Capacity [MW] 1 Eskom South Africa Camden Thermal 2 380 2 Eskom South Africa GrootVlei Thermal 2 380 3 Eskom South Africa Komati Thermal 2 202 4 ZESA Zimbabwe Hwange Thermal 3 300 5 ZESCO Zambia Kafue Gorge Hydro 4 60 6 SEC Swaziland Maguga Hydro 1 20 7 TANESCO Tanzania Ubongo Gas 12 100 Total 1,442 Table 2: Projects to be Commissioned in 2009 No Utility Country Name Type Units Capacity [MW] 1 ENE Angola Lobito Gas 1 83 2 Eskom South Africa OCGT Gas 1 1050 3 Eskom South Africa Grootvlei Thermal 1 565 4 Eskom South Africa Komati Thermal 1 114 5 ZESA Zimbawe Hwange Rehab Thermal 1 100 6 ESCOM Malawi Tedzani Hydro 1 20 7 SNEL DRC Inga 1 Rehab Hydro 1 55 8 SNEL DRC Inga 2 Rehab Hydro 1 160 9 TANESCO Tanzania Tegeta Gas 3 45 10 ZESCO Kariba North Hydro 1 15 Total 2,207 Zambia 11
  13. 13. MANAGEMENT COMMITTEE REPORT Mr. Christopher Nthala ZESCO (Zambia) Management Committee Chairperson 1. Introduction documents, applications for new membership of SAPP were received from Copperbelt Energy Cooperation (CEC) of Zambia, Mozambique Transmission Company (MOTRACO) and WESTCOR of Botswana. These applications were under the consideration of the Management Committee. Mr Christopher Nthala, ZESCO Generation and Transmission Director, was elected Chairperson of the SAPP Management Committee from September 2008. Under the leadership of ZESCO, the SAPP Management Committee carried out the following activities in the year under review: i. Completed the review of the Inter-Utility MOU and the Agreement between Operating Members (ABOM) and made all Operating Members sign the revised documents. ii. Undertook the SAPP Tariff Study to determine the underlying principles that surround electricity pricing and tariff setting in Southern Africa. iii. Spearheaded the implementation of demand side management (DSM) initiatives in the region, and iv. Instructed the development and implementation of a solution to handle imbalance energy in the power pool. 2. The CEO of SNEL (DRC) signing the Revised Inter-Utility MOU in Kinshasa in November 2008 3. SAPP Tariff Study The Final Report on the SAPP Tariff Study was completed and issued in July 2008 with recommendations on best tariff setting principles and practices. The recommendations were presented to the Ministers responsible for energy in the SADC region in April 2009. The key recommendations from the study were as follows: SAPP Reform and Documentation Review All Members of the SAPP signed the Revised Inter-Utility Memorandum of Understanding (IUMOU) by the end of November 2008. SNEL of the DRC was the last Member to sign the Revised IUMOU. The Revised IUMOU now permits other Electricity Supply Enterprises to join the SAPP and become Members. i. ii. The ABOM was also reviewed and finalised. The revised ABOM has been signed by all the SAPP Operating Members. The only base outstanding document to be reviewed is the SAPP Operating Guidelines. Following the SAPP reform and review of the base 12 The SAPP and the Regional Electricity Regulators Association (RERA) should establish a set of general tariff guidelines, focused on transparency and unbundling in price setting, especially as regards network tariffs. The SAPP and RERA should attempt to ascertain the likely role for marginal cost concepts in tariff determination over the next few years.
  14. 14. MANAGEMENT COMMITTEE REPORT iii. Figure1. With an exception of the HWLC units, the other technologies are aimed at hardwiring the energy savings into the grid. The SAPP should determine what types of internal network pricing models are compatible with increased trade and improved network service quality. iv. The SAPP should adopt the harmonization of accounting methods and techniques and move towards unification. v. SAPP Members should continue to use cost plus methodology and cap approaches to network costs and consider moving towards marginal cost analysis and pricing until systems are fully built out. vi. Subsidies should be funded directly by governments, and vii. As is depicted in Figure-1, the SAPP is expected to save a total of 1,000MW in 2009 using only CFL technology. In 2010, commercial lighting technology will be employed and the savings are expected to reach 1,600MW. By 2011 and with the implementation of the whole selected technologies, the savings will be as much as 3,000MW. SAPP is now working on a Business Case for Commercial lighting. The SADC governments should consider establishing regulators in their own countries to be responsible for electricity regulation and to ensure transparency in price setting across the region. Regulators should approach tariff adjustments with the aim of ensuring that the service is sustainable and there are sufficient incentives for system expansion. Fig 1: Load Management Strategies 5. viii. The SADC governments and regulators should consider, whenever appropriate, the move to multiyear price determinations in the region so that utilities and customers can see price certainty supportive of the massive investment programmes that are needed to address the diminishing generation surplus capacity. The SAPP Management Committee recommended the acceleration of the settlement of imbalance energy among members. The Committee further mandated the Operating and Markets Sub-Committees (the Task Force) to develop a technical solution in the handling of imbalance energy. The Task Force has come up with an agreement and a way forward on the treatment of imbalance energy in the SAPP from 1 April 2009 onwards. The agreement is an interim solution and would be reviewed before end of year 2009 after a scientific methodology has been concluded by the Task Force. The Task Force would be led by the SAPP Coordination Centre. At a meeting of the Ministers responsible for energy in the SADC region, individual utilities and governments agreed on how best to implement the recommendations. The SAPP Tariff Study was funded by a grant from the Development Bank of Southern Africa (DBSA). 4. Imbalance Energy Management Demand Side Management Initiatives 6. The concept of the Demand Side Management Power Station (DSMPS) is the roll out at the regional level of energy efficiency technologies that will reduce the demand increase. As part of the DSMPS, compact fluorescent lamps (CFLs) were identified as the first technology to be commissioned. Cooperation with Partners 6.1 Norwegian and Sida support The SAPP Project Document covering the period from January 2009 to December 2011 was developed by the SAPP and was accepted by the Government of Norway and Sida (Sweden). The Project Document is the guiding document in the implementation of a competitive electricity market. The government of Norway and Sida has availed a grant of around NOK 32 million for the project. Compared to incandescent bulbs, CFLs can save up to 80 % of electricity. Initially, the first four technologies will be made up of CFL's, Commercial Lighting (retrofits), Solar Water Heating and Hot Water Load Control (HWLC), see 13
  15. 15. MANAGEMENT COMMITTEE REPORT 6.1 ACP-EU Energy Facility 8. The priority actions financed from the ACP-EU Energy Facility for the SAPP (EUR 0.7 million) are mainly capacity building for network operations, system planning and promotion of public-private partnerships. I would like to take this opportunity and thank my predecessor, Mr. Nathaniel Maphathe of LEC, who chaired the SAPP Management Committee from September 2006 to September 2008. His contribution and leadership provided to the SAPP during his tenure of office is highly appreciated. 7. Power Pool Coordination Acknowledgement I would also like to thank Members of the Management Committee for the confidence that was shown in ZESCO by nominating ZESCO to Chair the Management Committee. The Coordination Centre Manager, Dr Lawrence Musaba, and the SAPP Chief Engineer, Mr Alison Chikova, attended the West African Power Pool (WAPP) General Assembly and the Donors meeting in Cotonou, Benin, from 29-31 October 2008. The SAPP and WAPP signed a Memorandum of Understanding (MOU) to enable the sharing and exchange of information between the two power pools. Dr. Musaba signed on behalf of the SAPP and Engr. Babatunde Adeyemo, Director, Information and Coordination Centre, signed on behalf of WAPP. Mr. Christopher Nthala Management Committee Chairperson Dr. Musaba (SAPP) and Engr. Adeyemo (WAPP) displaying the signed SAPP-WAPP MOU 14
  16. 16. OPERATING SUB-COMMITTEE REPORT April 2009 Onwards The OSC and Markets Sub-Committee (MSC) met jointly. It was agreed that Control Areas should be submitting interchange energy data to the Coordination Centre for monitoring and analysis. A tolerance band was agreed upon within which Inadvertent Energy would be paid back in kind by Control Areas. Other categories of interchange energy imbalance would be settled financially by Control Areas. The OSC and MSC agreed to meet jointly and come up with a suitable methodology for categorising and pricing other interchange imbalance energy. Interchange of emergency energy support shall be done in accordance with the SAPP governing documents. Mr. Leandro Kapolo NamPower (Namibia) Operating Sub-Committee Chairperson 1. System Demand Situation 3. Last year, because of rising demand and insufficient generation, most SAPP utilities declared system emergencies. In all SAPP utilities various load-shedding programmes were implemented. Eskom (South Africa) devised a recovery programme that was endorsed by SAPP members. As part of the recovery programme, Eskom cut power exports by ten percent (10%) and requested all South African customers to reduce load by the same percentage. The 2008 peak demand in the SAPP interconnected system was 43,267MW and that for Eskom was 35,959MW. Compared to the year 2007, the SAPP interconnected system demand and the Eskom system demand were less by about 2,466MW and about 554MW, respectively. This was largely attributed to the various load reduction activities implemented by SAPP utilities and the global economic down-turn. 2. Status of System Interconnection 3.1 Restoration of Interconnection The interconnected system disturbances which occurred between 19 and 21 January 2008 and between 2 and 3 February 2008 resulted in the SAPP operating as three (3) separate islands: § Zambia-DR Congo (ZESCO & SNEL), § Zimbabwe-Mozambique (ZESA, BPC-North & EDM-North/HCB), and § Africa – Botswana – Mozambique – Lesotho South – Swaziland - Namibia (Eskom, BPC-South, EDMSouth, LEC, SEC, NamPower) Interchange Imbalance Energy The ZESA-BPC-Eskom (Zimbabwe-Botswana-South Africa) interconnector was returned to service on 3 April 2008. 2.1 Accumulation from January2008 The Operating Sub-Committee (OSC) noted that from January 2008 to March 2009 there was a huge accumulation of interchange imbalance energy. Several meetings were conducted to address this accumulation. Eventually the interchange energy imbalance was categorised as Inadvertent Energy, Emergency Energy and Other Imbalance Energy. This was summarised and allocated to supplier and consumer among the Control Areas. It was resolved that pay-back and financial settlement of this accumulation be agreed and done bilaterally by respective Control Areas. A Joint Technical Committee (JTC) comprising experts from ZESA and ZESCO (Zimbabwe and Zambia) was constituted to find and propose ways of restoring the ZESA – ZESCO interconnection. The interconnection was then returned to service on 2 July 2008. From this day up to 8 September 2008 the interconnection was largely floating as very little trading took place. On 8 September 2008, the interconnection was taken out of service following system disturbances that occurred on 6 September 2008. The JTC made investigations and lined up short-term and long-term conditions for the interconnection to be restored. After minimum conditions for restoration were met, the interconnection was returned to service on 14 November 2008. Thereafter active energy trading resumed via the interconnection. 3.2 Zambia-DR Congo Interconnection 2.2 Handling of Interchange Imbalance Energy from 1 15
  17. 17. OPERATING SUB-COMMITTEE REPORT works, among other activities: The Zambia – DR Congo (ZESCO – SNEL) interconnector (220kV Luano – Karavia line) was taken out of service on 1 February 2009 for construction works of the T-off substation at Michelo in Zambia. Slightly delayed by bad weather, the system was restored at 17h31 on 7 February 2009. After commissioning of the Michelo Substation, effectively the Zambia – DR Congo interconnector is now the 220kV Michelo – Karavia line. 4. § out comprehensive system stability studies in Carry relation to the system disturbances being investigated. § Review of the operation of the interconnected system considering protection schemes, control devices, load-shedding schemes. System Disturbances § technical capacity for the SAPP in system Build analysis. 4.1 Reported System Disturbances This project is in progress and is expected to be completed by March 2010. A total of twenty-two (22) system disturbances were reported on the SAPP interconnected system in the period from April 2008 to March 2009. Refer to Figure 1 below for general outlook of SAPP system disturbances. Details of the disturbances that occurred have been captured in Table 1 at the end of this report. 5 Technical and other issues 5.1 Telecommunications The SAPP Telecommunications Working Group (TWG) met in Gaborone, Botswana, from 4 to 5 December 2008. The TWG deliberated on the current challenges in telecommunications in the SAPP. The TWG recommended that fibre optic cable(s) be the backbone of telecommunications facilities in the SAPP for adequate bandwidth, quality service and cost-effectiveness. The TWG also recommended that, while fibre optic facilities are being installed on remaining gaps on the interconnected system, the existing VSAT telecommunications contract be extended for the next two (2) years. The OSC further received the following recommendations from the TWG: § Operating Members should build fibre optic infrastructure up to border points with neighbouring countries; Figure 1: Reported SAPP system disturbances 4.2 System Disturbance Investigation The OSC constituted a task team composed of members from all operating utilities including Copperbelt Energy Corporation (CEC) of Zambia and Hidroelectrica de Cahora Bassa (HCB) of Mozambique to investigate the system disturbances that occurred since the beginning of the year 2008. These disturbances had various impacts on the interconnected system such as islanding, total network blackouts and interruption of energy trading. Also, in some cases interconnectors were taken out of service to allow stabilisation of individual networks. § SAPP should prioritise the connection of the The three Control Areas with fibre optic to replace the current VSAT system; § All new transmission projects should include fibre optic; and, § Operating Members should work to get a fibre optic connection to the host Control Area. The task team resolved that investigation of some system disturbances cannot be concluded unless a comprehensive study of the SAPP system is conducted. Using funds donated by international cooperating partners, the SAPP employed Norconsult to be the technical team leader of the task team who will carry out the following Implementation of these will facilitate safe and reliable operations of the interconnected system. The OSC escalated these recommendations to utilities through reports to the SAPP Management Committee. 16
  18. 18. OPERATING SUB-COMMITTEE REPORT Republic of South Africa, in August 2009. The workshop was attended by representatives from all SAPP members including MOTRACO, HCB and CEC except for TANESCO and SEC. The second and last part of the workshop was scheduled for November 2009 and all SAPP members confirmed their participation. 5.5 Controllers'/Operators' and Traders Forum The 5th SAPP Controllers'/Operators' and Traders' Forum took place in Mbabane, Swaziland in October 2008. The forum discussed various system operations and energy trading issues affecting the SAPP interconnected system. Dr. Graeme Chown, of Power Planning Associates Energy (PPA), gave a training presentation on interconnected system operation. The forum made recommendations to OSC on the following issues: Figure 2: Some members of the TWG at a recent meeting. 5.2 SAPP SCADA system The SAPP is planning to install the Supervisory Control and Data Acquisition (SCADA) system at the SAPP Coordination Centre in Harare, Zimbabwe. This project will be implemented using funds donated to SAPP by international cooperating partners. Tenders for supply of the system were floated internationally. Bids were received and evaluated. Once contract negotiations have been concluded, installation and commissioning works will commence. The SAPP SCADA system will facilitate monitoring and reporting of performance standards and information sharing, among other system operations activities. § Cancellation of equipment outages § System time error correction § Empowerment of Controllers in effecting changes in interchange energy schedules § Challenges in voice telecommunications § Training and certification of Energy Traders § Internet connectivity speed for the Day Ahead Market platform The OSC considered the recommendations and implementation of some of them is underway. 5.3 Control Area Surveys 5.6 Documentation Review and Development In the year under review, the OSC embarked on the Control Area Survey exercise. The main objectives of the exercise were: After completing revision of the Inter-Utility Memorandum of Understanding (IUMOU), Agreement Between Operating Members (ABOM), the SAPP is now in the process of revising the Operating Guidelines (OG). The draft revision of the OG is in circulation and a team comprising members of the OSC is due to finalise the revision in the coming year. § To monitor and assess the control performance of a Control Area; and §highlight control equipment malfunction and To errors; 6. A team from the SAPP Coordination Centre carried out the survey on the Eskom (South Africa), ZESA (Zimbabwe), and ZESCO (Zambia) Control Areas. The OSC deliberated on some findings and recommendations reported by the team. Election of the New OSC Chair I would like to congratulate EDM on being elected as the new Chair of the OSC from September 2009. Further, I would like to thank the SAPP Members, in particular members of the OSC, for their support during my tenure of office as the OSC Chairperson. It was quite a challenging term characterised by rising power demand against deficit in supply, huge accumulation of inadvertent energy, and wide-affecting system disturbances. Despite these difficulties, SAPP members remained committed and closer than ever in resolving the challenges facing the region. I wish Mr. Adriano Jonas, who has been nominated 5.4 Capacity Building Under the auspices of the European Union, the first part of the OSC Workshop on Network Reliability, facilitated by SOFRECO of France, took place in Johannesburg, 17
  19. 19. OPERATING SUB-COMMITTEE REPORT Mr. Leandro Kapolo Operating Sub-Committee Chairperson Mr. Adriano Jonas EDM (Mozambique) Incoming OSC Chairperson. by (EDM, Mozambique) to chair the OSC, all the best. Table 1: System Disturbances from 1 April 2008 to 31 March 2009 No Date Country Detail of Disturbance 1 25 April 2008 DR Congo (SNEL) The Nseke-Kolwezi 220kV line tripped on phase to ground fault following vandalism of the line. This led to the 100MVA 220/120kV transformer at Nseke tripping on overload. Power exports to SAPP were curtailed. 2 6 May 2008 Zimbabwe (ZESA) At 13h52 the 330kV Warren–Dema feeder tripped and locked out due to a yellow-phase transient fault which subsequently led to the trip of the 330kV Mozambique (Songo) – Zimbabwe (Bindura) interconnector on over frequency. Zimbabwe lost 200MW of power imports from Mozambique and its system was split into two islands, the eastern one was blacked out. The western island remained connected to Kariba South and Hwange power stations and to the South Africa (Eskom) interconnection. At 14h06 supplies from Mozambique were established and at 15h10 the two islands were synchronised at Dema Substation (Zimbabwe). 3 7 May 2008 Zimbabwe (ZESA) At 02h17 the 400kV Insukamini – Phokoje line tripped on three phase main protection. This resulted in Hwange Generator 3 and the 220kV Bulawayo- Francistown line tripping. At the same time a bus coupler breaker tripped at Songo (Mozambique) and imports from Mozambique were momentarily observed dropping significantly to 16MW compared to a schedule of 400MW but immediately normalised. Synchronising at Insukamini (03h01) was delayed by the abnormally high voltages on the ZESA system. 4 18 June 2008 Zimbabwe (ZESA) At 13h32 the 330kV Warren busbar was cleared. All the three 330kV lines from Kariba South to Alaska tripped and, subsequently, all generators at Kariba South and the Harare Power Station generator tripped. The ZESA system was split into two islands. Imports from Mozambique supplied the eastern island while Hwange Power Station and imports from South Africa (Eskom) supplied the western one. At Kariba South supplies were established at 14h43. The two islands were synchronised at 16h19. By 17h19 all generators at Kariba South were on line. 5 11 July 2008 Zambia (ZESCO) At 16h33 the 330/17.5 kV main transformer T1 tripped at Kafue Gorge Power Station resulting in the tripping of the associated generators 1 and 2 on over frequency due to loss of load. The tripping of the 330/17.5 kV main transformer T1 was caused by the tripping on Buchholz of the associated single phase transformer T1Y. The ZESCO (Zambia) – ZESA (Zimbabwe) tie line power flow changed from 121MW export to 134 MW import. The system frequency was almost stable with minimal variation. While investigations on the 330/17.5 kV main single phase transformer T1Y commenced, Kafue Gorge Units 1 and 2 were taken out for the rehabilitation works under the planned Power Rehabilitation Project (PRP). 18
  20. 20. OPERATING SUB-COMMITTEE REPORT Table 1: System Disturbances from 1 April 2008 to 31 March 2009 No Date Country Detail of Disturbance 6 10 August 2008 Democratic Republic of Congo (DRC) SNEL At 17h43 Synchronous condenser machine 01 at SCK Kolwezi Conveter Station tripped. At that time, there was over-frequency and over-voltage (from 230kV to 250kV) due to loss of load in the interconnected system and auxiliary supplies were disturbed at Kolwezi. Exports from DRC (SNEL) to Zambia (ZESCO) increased from 20MW to 90MW Zimbabwe (ZESA) At 17h43 the following tripped in the ZESA system: 330kV Sherwood – Hwange 2 line (over-voltage), Kariba South Generator 5 (over-frequency); Hwange generator 2 (overall protection); 330kV Hwange – Insukamini line (over-voltage), 330kV Insukamini – Bulawayo line (Distance main protection ABC), 220kV Bulawayo – Francistown line (over-voltage),Bulawayo 330/220kV transformer T3AB (OCEF), and Hwange Generator 6. The SAPP interconnection was split at Insukamini. A total of 369MW of generation was lost. Power exports and wheeling were disturbed. Zambia (ZESCO) At 17h43 one Kariba North Bank Power Station unit tripped on over-frequency. Also both 220kV Victoria Falls - Muzuma and 220kV Victoria Falls – Sesheke lines tripped, there-by islanding the Victoria Falls Power Station which subsequently tripped because it could not support all the loads in that region. A total of 238MW generation and an estimated 300MW load were lost. 7 19 August 2008 Zimbabwe (ZESA) At 07h12 the following tripped in the ZESA system: 330kV Sherwood – Hwange 2 line (main trip, voltage monitor), Hwange generator 3 (overall protection); 330kV Hwange – Insukamini line, 330kV Insukamini – Bulawayo line (general trip, OCEF), 220kV Bulawayo – Francistown line (over-voltage),Bulawayo 330/220kV transformer T3AB (OCEF), and Hwange Generator 5 (backup protection). A total of about 262MW of generation was lost. Power exports and wheeling were disturbed. 8 6 September 2008 Zimbabwe (ZESA) At 11h56 in the ZESA Control Area, while the 330kV Sherwood Hwange no. 1 line was out for voltage control, the following 330kV transmission lines tripped: Sherwood Hwange no. 2, Hwange Insukamini, and Insukamini Bulawayo. The interconnected system was split at Insukamini. Subsequently, Generator no. 2 and no. 5 at Hwange Power Station and Generator no. 5 at Kariba South Power Station tripped. Hwange Power Station and Bulk Supply Point completely lost supplies and a load of about 48MW was lost. Generation totalling 369MW from Kariba and Hwange was lost while a load of 727MW was out due to planned load-shedding. At Bulawayo, the 330/220kV transformer T3AB and the 220kV Bulawayo Francistown line tripped. Wheeling of 55MW from HCB to BPC, 20MW from EDM to BPC and 68MW from HCB to Eskom, and export of power from ZESA to NamPower was interrupted. Zambia (ZESCO) At 11h56 an incident of high frequency was observed. Immediately at Kariba North Bank Power Station unit no. 1 generating 167MW tripped on over-frequency. Also, tie line flows surged up momentarily from the ZESA into the ZESCO system. Then the ZESA – ZESCO tie line flows dropped to zero (0MW). A situation of under-frequency prevailed in the ZESCO system, leading to tripping several circuits on under-frequency protection. Also, high system voltages were experienced. At 12h33 Kariba North Bank Power Station unit no. 2 generating 174MW tripped on over-voltage. 220kV Victoria Falls – Muzuma transmission line tripped and generation of about 17MW was lost at Victoria Falls Power Station. The ZESCO – SNEL interconnection was lost when the 220kV Luano – Karavia transmission line tripped. Over 520MW of national load was lost in Zambia. 9 10 September 2008 Zimbabwe (ZESA) At 12h31 330kV Sherwood-Chertsey, Insukamini-Hwange and Bindura Songo Lines tripped simultaneously followed by Unit 5 at Kariba South and the only unit in service Hwange, Unit 3.This split the system into three (3) islands. No load was lost. Restoration efforts were immediately engaged but were hampered by serious high voltage and frequency mismatch problems. However, the Songo Bindura interconnector was synchronised at 12h58 the Eskom system was coupled at 13h11. 11 17 November 2008 Zambia / DR Congo The Luano (Zambia) – Karavia (DR Congo) interconnector tripped during lightning thunderstorms on line distance impedance protection. 12 21 November 2008 Zambia / DR Congo The Luano (Zambia) – Karavia (DR Congo) interconnector tripped during lightning thunderstorms on line distance impedance protection. 13 6 December 2008 Zambia At 11h20 generators 1, 2, 3 and 4 at Kariba North Bank Power Station, generating about 650MW, tripped due to loss of 380V auxiliary supplies. Scheduled energy interchange on the ZESA-ZESCO tie line was temporarily affected. 14 13 December 2008 South Africa / Swaziland / Mozambique At 14h23 the Arnot 400kV bus zone protection operated resulting in the loss of 400kV Arnot - Maputo line. At 15h07, while the fault finding was in progress, 275kV Komatipoort - Infulene line tripped due to a line fault. Edwaleni 2 was thus supplied from Camden and consequently low voltages were experienced at Maputo. To improve voltages Mozal was temporarily shed off. 15 19 December 2008 Zimbabwe / Mozambique At 15h32 the ZESA system split into two islands after 330kV Sherwood-Alaska and Sherwood-Norton lines tripped. At the same time the bus coupler circuit breaker tripped at Songo and load on Songo-Bindura line temporarily increased from 256MW to 353MW. About ten minutes later the islands were synchronised and shortly afterwards at 15h43 the bus coupler at Songo was re-closed. 16 24 December 2008 DR Congo At 08h56 Kolwezi 220kV bus zone protection operated leading to loss of 220kV Kolwezi – Panda and Kolwezi – Fungurume lines and trip of Converter no. 21 with a load of 75MW. All this equipment was restored by 13h00 on the same day. 19
  21. 21. OPERATING SUB-COMMITTEE REPORT Table 1: System Disturbances from 1 April 2008 to 31 March 2009 No Date Country Detail of Disturbance 17 29 December 2008 Mozambique At 13h46 the Maputo 275kV bus zone protection operated due to failure of transformer surge arrestor. The following tripped at Maputo: 400/275kV Transformer 01, 275kV Capacitors 03&04, 275kV Maputo-Matola and Maputo-Infuleni lines. At this time the Komatipoort Infulene line was out of service due to a trip-and-lockout of the previous evening. This resulted in power interruption to the Southern EDM network. 18 10 January 2009 Zimbabwe / Botswana At 11h59 Insukamini - Phokoje line tripped and locked out due to Red & Yellow phases transient ground faults as a result of lightning. The loss of the interconnector resulted in interruption of ZESA exports of 146MW to NamPower. The line was restored to service at 12h15 and exports resumed. 19 1 February 2009 Zimbabwe / Zambia At 11h16 the following 330kV lines tripped in the ZESA system:Tokwe-Chertsey,ChertseyBulawayo,Chertsey-Sherwood,Bulawayo-Insukamini, Sherwood-Hwange2 on main protection. The Kariba South G5 tripped on over-frequency, import from HCB dropped, system split. At 11h17, in the ZESCO system 180MW generator G3 at Kariba North tripped and two generators at Victoria Falls tripped on overfrequency due to loss of load. 20 10 February 2009 Zimbabwe At 21h56 the following tripped in the ZESA system: Bulawayo transformer T3AB (differential protection), Chertsy – Sherwood line (main protection), and Kariba South G5 (overfrequency). The system split and load was lost. A surge divertor was found faulty on Bulawayo transformer T3AB. 21 26 March 2009 Zimbabwe / Mozambique At 16h28 the ZESA system experienced a disturbance characterized by trips of the following 330kV feeders: Sherwood- Chertsey and Harven - Bulawayo. This resulted in a ZESA system split and loss of some load and loss of generator number 5 at Kariba South on over-frequency. Dynamic unscheduled change in interconnector power flows was also experienced. This disturbance was attributed to power swings caused by trip of a generator on the HVDC Bus Bar and the Bus Coupler at Songo and suspected load rejection by Songo generators. The split system in ZESA was synchronised eleven minutes later at 16h39. 22 30 March 2009 Zimbabwe At 05h50 the ZESA system experienced a disturbance caused by trip of the 330kV Dema-Warren Feeder on main protection trip. This resulted in a system split and dynamic unscheduled increase in HCB interconnector power flow from 130MW to 249MW. ZESA manually shed off 180MW in the eastern island in order to control the inadvertant energy supplied by HCB. The system was synchronised at 06h55. The delay to sysnchronise was due to failure to reset trip relays from supervisory. This disturbance was attributed to suspected line insulation breakdown during the wet meteorological conditions. 20
  22. 22. ENVIRONMENTAL SUB-COMMITTEE REPORT 1. 2.5 Zimbabwe-Zambia-Botswana-Namibia Introduction. (ZIZABONA) Lines The period under review witnessed continuous improvement in different aspects of Environmental The ZIZABONA lines will increase transmission capacity Management in the Southern African Power Pool. between the four SAPP Member countries. The Environmental Impact Assessment reports have been 2.1 Evaluation of Environmental Impacts of the SAPP approved by the relevant authorities in Zimbabwe and Transmission Projects 2. Zambia. However, similar reports are yet to be submitted for approval in Botswana and Namibia. Mrs. Elenestina Mwelwa Western Power ZESCO (Zambia) Corridor Environmental Sub-Committee Chairperson 3. Generation projects The project aims to transfer power from Inga 3 Dam in the DRC to Angola, Namibia, Botswana and South Africa. The year under review witnessed several planned Environmental studies for Inga 2 have been completed. generation projects being subjected to Environmental and The transmission line phase however is still at project Social Impact Assessments by utilities in their respective concept. countries. Most projects reported upon are on course and EIA reports have been approved by the relevant authorities. 2.2 DRC - Zambia Interconnector However, of concern are the fees charged by the approving authorities for doing the EIA reviews, which are too high and The DRC-Zambia interconnector aims at strengthening the as such tend to retard the approval process. existing transmission capacity between the two countries in order to de-congest transmission bottle neck between the 4. Environmental Management Guidelines north and south of the SAPP network. The current status is that the relocation of the displaced people has been The Environmental Sub- Committee (ESC) continues to completed on the DRC side and compensation will be develop and review existing Environmental Management made by the World Bank. Compensation of the displaced Guidelines for use by SAPP utilities. The following communities on the Zambian side has been completed. guidelines were developed by the Sub-Committee. 2.3 Zambia-Tanzania-Kenya Interconnector 4.1 Guidelines on the Use & Disposal of Compact Fluorescent Lamps (CFLs) The project aims to interconnect Tanzania to the SAPP grid as well as providing a link between the SAPP and the East In an attempt to use power efficiently and reduce demand, African Power Pool. The Environmental Impact the SAPP embarked on a project to replace incandescent Assessment (EIA) report for the project has been approved bulbs with energy saving bulbs commonly known as by the Environmental Council of Zambia. Similarly, an Compact Fluorescent Lamps (CFLs). However, concerns Environmental and Social Impact Assessment has also were raised about the presence of mercury in the CFLs, been done on the Tanzanian side. which is a highly toxic heavy metal with severe human health adverse effects. The ESC therefore developed 2.4 Zambia-Namibia Interconnector guidelines on the use and disposal of these CFLs in a The project, which aims at increasing transmission capacity developed guidelines are to be tabled before the SAPP between Zambia and Namibia has seen approval of all Management Committee for approval during the SAPP environmental reports by the respective country's' Meetings in September 2009. manner that would not compromise human health. The environmental authorities. Project construction is complete and re-settled communities in Namibia are set to receive 5. compensation to the tune of R3 million. 21 Working Groups Reports
  23. 23. ENVIRONMENTAL SUB-COMMITTEE REPORT 5.1 Demand Side Management (DSM) SAPP. The SAPP Management Committee accepted a request by the ESC to make presentations on Climate The Environmental Sub-Committee prepared a regional Change at every Plenary session during the semi-annual Energy Efficiency project proposal for funding as part of SAPP Meetings. So far one presentation was made during SAPP's DSM initiative. The proposal was circulated to the SAPP meetings in Harare in March 2009. potential donors for funding. To date, the European Union has indicated interests in funding the project but has not 6. Environmental Sub-Committee Representation firmly committed themselves and follow-ups are still continuing. Utilities continue to get representation to the ESC at all SAPP Meetings. The year under review saw the following members representing the ESC: § Joseph Phalalo – BPC, Botswana § Pierre – ENE, Angola Kiala § Matseliso Moremoholo – LEC, Lesotho § Dannie Louw – NamPower, Namibia § Jeromino Marrime – EDM, Mozambique Compact Fluorescent Lamp, can save up to 80% Electricity use in homes 5.2 Training The ESC continues to give priority to Capacity Building through training members on relevant Environmental Management within the power sector. The SAPP held two training sessions for the members during the period under review. A training session was held on the preparation of Clean Development Mechanism (CDM) Projects for funding under the Carbon Credits Fund. This was held in Maputo, Mozambique, in September 2008. Another training session on Renewable Energy was held in Harare in March 2009. Meanwhile, ESC members received a number of environmental training courses at their respective utilities and abroad. 5.3 Climate Change SAPP, being an organization whose activities do have a lot Hydropower is renewable energy and has minimal effect on climate change. The SAPP has great potential SNEL, DRC § Elonga Nkanda –of hydropower at various sites As Climate Change issues take centre stage worldwide, the of bearing on Climate Change is obliged to take initiatives to § Chrispen Maseva – ZESA, Zimbabwe reduce its carbon foot print. As a result of this a Climate § Elenestina Mwelwa – ZESCO, Zambia Change working group was constituted, whose role is to § Havenga – Eskom, RSA Fiona create awareness on the Climate Change issues in the § Aubrey Phale – Eskom, RSA 22
  24. 24. ENVIRONMENTAL SUB-COMMITTEE REPORT Constance van Zuydam - SEC, Swaziland § Mrs Elenestina Mwelwa § Gertrude Malulu - ESCOM , Malawi ESC Chairperson § Maneno Katyega - TANESCO, Tanzania § Collins Chabuka - CEC, Zambia All members reported on the Key Performance Indicators at all SAPP Meetings held during the period under review. 7. Environmental Management at SAPP Utilities It is worth noting that all utilities are making efforts to implement Environmental Management Systems though at different scales. While utilities like Eskom and ZESCO have established fully fledged Environmental Departments at their respective utilities, it is encouraging that other utilities are following suit and are expected to increase staffing in their departments in the coming year. 8. Acknowledgement I would like to acknowledge the confidence that the ESC has shown in me by nominating me to chair the ESC for the second and last term. My special thanks go to Mr. Johnson Maviya, the SAPP Environmental Officer for cocoordinating the Environmental Sub-Committee activities successfully. 23
  25. 25. PLANNING SUB-COMMITTEE REPORT members from a coordination of their individual expansion plans. The generation and transmission expansion program has 57,000 MW added at a cost of USD 53 billion. The benefits of regional integration, coordination, and optimization are noted as almost USD 8.7 billion is realized in savings. On transmission integration the Pool Plan recommends the acceleration of interconnecting Angola, Malawi and Tanzania to the SAPP gird so that the region can fully Mr O'Brien Hekandjo NamPower (Namibia) Planning Sub-Committee Chairperson 1. benefit on all the resources available. The Pool Plan will be launched to solicit financial support for the implementation of projects. Introduction 5. A number of new generation projects have been commissioned amounting to 1,442 MW in the year under The transmission wheeling charging arrangements have review. New capacity was commissioned in most countries been reviewed and await to be implemented. SAPP is with the biggest amount being commissioned in South proposing to move from the MW-km method to the nodal Africa. The generation capacity reserve margins remain method. Internal consultations and approvals are needed lower than the planned levels of 10.2%. The situation will before implementation. improve after 2013. 2. The SAPP Coordination Centre and PPA Energy carried SAPP Demand and Supply Situation out some visits to BPC (Botswana), Eskom (South Africa), SEC (Swaziland), NamPower (Namibia) and ZESCO The peak demand in SAPP during the year was 43,267 MW (Zambia). The objective was to evaluate the impact of the compared to 43,755 MW last year. The reduction has been new transmission wheeling and loss charges on the utilities attributed to the economic decline and suppressed demand during electricity trading on bilateral and Day Ahead Market in most countries. This was a 1 % decline in demand. 3. trades. SAPP Demand Side Management Program 6. Most utilities utilized load management strategies to Transmission Interconnector Projects The Zimbabwe-Zambia-Botswana-Namibia (ZIZABONA) manage the supply side. The SAPP saves approximately Project continues to gather momentum. 3,500 MW annually through load management strategies. This enables the region to meet its power requirements. 4. Transmission wheeling charging § Inter-Utility MOU was completed and signed in The December 2007. SAPP Pool Plan § Project Development Plan was completed and The The SAPP Integrated Generation and Transmission signed in April 2008. Expansion program was finalized with financial assistance from the World Bank and the Norwegian Government. § Final Draft of the Inter-Governmental MOU is The under review by utilities and member country Attorney The Pool Plan's main objectives were: Generals. Signing is expected to be done at the next meeting of the Ministers responsible for energy in the § Develop an integrated generation and transmission SADC region in April 2010. expansion plan for the SAPP. § Determine the benefits that can be derived for SAPP § Joint Development Agreement is in the process of The 24
  26. 26. PLANNING SUB-COMMITTEE REPORT 7. being finalized. Acknowledgements §w e r P u r c h a s e A g r e e m e n t s , W h e e l i n g Po I would like to take this opportunity and thank members of Agreements, Project Development Agreements the SAPP Planning Sub-Committee for supporting me (ZESCO/ZESA/NamPower) are in the process of during my tenure of office. being finalized. I would also like to take this opportunity and congratulate Phase 1 of the project involves the construction of a 330- Ms Monica Moeko of Lesotho Electricity Cooperation who kV from Hwange thermal power station to Victoria Falls was appointed Chairperson of the PSC from September 330 kV substation in Zimbabwe then another 330 kV line to 2009. Livingstone substation in Zambia. This will cost USD 81 million. Phase 2 involves the construction of another 330 kV line from Hwange in Zimbabwe to Pandamatenga in Botswana Mr. O'Brien Hekandjo and then another 330 kV line to Zambezi 330 kV substation Planning Sub-Committee Chairperson in Namibia at a cost of USD 144 million. 25
  27. 27. MARKETS SUB-COMMITTEE REPORT finalized and circulated to members for approval and adoption by the SAPP. § Implementation Plan for Market Opening was An developed and circulated to members by the SAPP Coordination Centre. § Capacity building on the new trading platform continued and a refresher course was conducted in South Africa from the 14th to the 16th of April 2008. Mr Michael Barry Eskom (South Africa) Markets Sub-Committee Chairperson 1. § Terms of reference for market monitoring and surveillance were completed by Nord Pool Introduction Consulting and circulated to members for approval and adoption by the SAPP. In line with the Revised Inter Utility Memorandum of Understanding (IUMOU) of April 2007, the Markets Sub § A working document on Balancing Mechanism which Committee (MSC) was established during the period requires further development was developed by under review. The MSC have so far held two meetings Nord Pool Consulting for the SAPP. during the period under review, with the inauguration meeting being held in Maputo, Mozambique on 15 3. September 2008. Eskom was elected Chairperson of the MSC during these meetings. Mr Michael Barry of Eskom The SAPP Coordination Centre appointed Mr. Musara C. became the inaugural chair of the MSC. The second Beta to the position of Chief Market Analyst with effect from meetings were held in Harare, Zimbabwe from 9 to 10 the 1st of October 2008. March 2009. Engineer Beta is a former employee of ZESA Holdings Ltd, Zimbabwe. Admittedly, the year under review presented more 4. challenges than the previous year and more importantly, the year was characterized by deteriorating Day Ahead Market Developments A formal DAM system development process macroeconomic conditions in response to the global encompassing planning, testing and review has been put economic cool down. Notwithstanding this harsh business in place since the market trials opened in February 2008. environment, the Day Ahead Market (DAM) was opened in February 2008 for market trials. Controls to prevent trading disruptions occurring have been satisfactory with the establishment of a remote The opening and starting of the competitive market comes switching facility currently located in South Africa as a at a time when the SADC region is experiencing a growing contingent plan should the IT system installed in Harare supply deficit. Nevertheless, energy trading is still taking fail. place via bilateral contracts. In addition, the global economic cool down experienced in 2008, coupled with The DAM governance documents in the form of the DAM the Demand Side Initiatives (DSM) by the SAPP has seen Book of Rules and Participation Agreement, have been a number of utilities experiencing a fall in demand in 2008 finalized and circulated to members for signing before thereby creating a good opportunity for trading in the DAM. 2. Human Resources market opening. Through the governing documents, the Markets Sub Committee (MSC) has set standards for the Market Highlights SAPP Coordination Centre to implement systems of internal control, accounting and information systems § SAPP DAM governance documents were The aimed at providing reasonable assurance that the trading 26
  28. 28. MARKETS SUB-COMMITTEE REPORT 6. platform is safeguarded and the risk of error, fraud or loss Acknowledgement is reduced in a cost effective manner. Finally, I would like to commend all the members of the The following utilities BPC, EdM, Eskom, CEC, Markets Sub Committee for their sustained participation NamPower, ZESA and ZESCO have indicated an appetite and have no doubt that they will face up to the challenges to trade in the Day Ahead Market. which the Day Ahead Market will bring. Participation by members on market trials has been rising I also wish to extend my appreciation to the Coordination steadily since inception. The SAPP CC has developed a Centre Staff for the hard work and dedication shown reporting format for publishing DAM results. These are throughout the year. currently being published on a monthly basis. A website was also developed where market results can be viewed by participants and the general public. Table 1 DAM Trials Market Clearing Prices Mr Michael Barry Chairperson 5. SAPP Traders and Operators Forum. Thirty five participants from twelve members convened to share experiences on market developments and operational issues. The fifth session of the Traders and Operators Forum was held in Manzini, Swaziland on the 23rd and 24th of October 2008 Part of the 5th Traders and Operators Participants. 27
  29. 29. CO-ORDINATION CENTRE REPORT Dr. Lawrence Musaba Coordination Centre Manager Mr. Musara Beta Chief Market Analyst Mr. Alison Chikova Chief Engineer Mr. Sydney Zimba Operations Engineer Ms. Daisy Mudangwe Finance & Admin Officer Mr. Johnson Maviya Environmental Officer Ms Caroline Ganyani IT Specialist Mr. Elisha Mutambudzi DAM Market Finance Officer Mr. Simon Jaricha Messenger 28
  30. 30. CO-ORDINATION CENTRE REPORT The SAPP Coordination Centre (SAPP-CC) carried out a number of activities under the direction of the Coordination Centre Board and the Management Committee. Chief amongst the activities were: liaising with international cooperating partners (ICPs), implementing the SAPP competitive market, finalizing transmission pricing and ancillary services market, developing a scientific method for handling imbalance energy, and conduct a Control Area survey. 1. Meetings and Workshops Some of the delegates that attended the SADC Power Steering Committee meeting at SAPP Coordination Centre in Harare 1.1 SADC Energy Thematic Group Meeting Ababa, Ethiopia. The forum outlined concrete ways in The SADC Energy Thematic Group Meeting took place in which to harness Africa's energy potential for sustainable Gaborone, Botswana, on 28 May 2008. Deliberations development. A paper was presented on moving from centred on the SADC Energy sector projects. Dr Lawrence interconnections to Power Pooling highlighting the Musaba, the SAPP Coordination Centre Manager, experiences of SAPP. presented a paper covering the current status of the regional electricity supply situation, the regional electricity 2. Human Resources generation and transmission projects and the SAPP Pool Plan. Another meeting was held in December 2008. The 2.1 Chief Market Analyst meetings are coordinated by the lead International Cooperating Partner (ICP) from the Norwegian The SAPP Coordination Centre appointed Mr. Musara Beta Government via the embassy in Maputo, Mozambique. to the position of SAPP Chief Market Analyst with effect from 1 October 2008 following the interviews that took 1.2 SADC Power Steering Committee place in Harare in January 2008. Mr. Beta is a former employee of ZESA in Zimbabwe. The Members of the SADC Power Steering Committee (PSC) met at the SAPP Coordination Centre in Harare, Mr. Beta has a Bachelor of Science Honours degree in Zimbabwe, to review the regional project status and Electrical Engineering from the University of Zimbabwe implementation of the SAPP priority projects. (UZ), a Masters Degree in Power Engineering from Australia and a Masters in Business Administration Degree The SADC PSC is composed of Senior Government (MBA) from UZ. He worked for ZESA from 1992 until his Officials from the Ministry of Energy of the various member appointment at the Coordination Centre. countries, the SADC Secretariat and the SAPP member utilities. Other key stakeholders, such as the African Development Bank were also invited. Norway as the Lead ICP was also invited. The meeting discussed what needed to be done in order to accelerate the implementation of power projects in the SADC region at a time that the region has a supply deficit. 1.3 Power Pool Forum Mr. Alison Chikova the SAPP Chief Engineer attended a forum on interconnections and electricity access for Mr. Musara Beta Chief Market Analyst sustainable development organized by the UN in Addis 29
  31. 31. CO-ORDINATION CENTRE REPORT adjacent control areas using different criteria. As 2.2 Temporary Secretary availability of AGC and its operation in the recommended Tie Line Bias Control mode is vital to Ms. Edeline Mujongondi was appointed to the post of Control Area performance, it is suggested that Control Secretary on a temporary basis at the Coordination Centre Areas be submitting a monthly report on performance of to assist with Investor Roundtable logistics and other their AGC. meetings. The appointment of Ms. Mujongondi took effect from 1 July 2009. The SAPP-CC recommended in the draft report that there was need to enhance communication amongst system Ms Mujongondi has a Diploma in Secretarial Studies from controllers and energy traders on interconnected system The Pitman Institute in Harare, Zimbabwe. operation issues so as to minimize interchange scheduling errors. Availability of telecommunication facilities is vital in this regard. Following concerns raised by ZESA of Zimbabwe on the impact of frequency relaxation on AGC controls on tie line flows, there is need to assess the extent of this impact and recommend a way forward. 4. Acknowledgement I would like to take this opportunity and thank members of staff of the SAPP Coordination Centre for their hard work during the year that has gone by. Ms. Edeline Mujongondi Temporary Secretary 3. Control Areas surveys Control Area surveys were conducted by the SAPP CC Dr. Lawrence Musaba during the year. A draft report was circulated to all SAPP Coordination Centre Manager members and would be finalized after receipt of comments from members. The preliminary findings were as follows: i. The control equipment was performing well and the telemetering errors were minimal. Also, the frequency bias settings of the Control Areas and interchange scheduling were proper. ii. Overall, generation under AGC was adequate although the SAPP need to do a detailed audit on this. iii. Control Areas need to monitor and control their Control Area performance more effectively as an on-going process both during normal conditions and during disturbances. Criteria, parameters, and procedures for doing this should be clearly communicated to system controllers and key parameters like ACE and frequency should be recorded continuously for access by authorized auditing/survey teams. The SAPP should also assess the impact on Control Area performance of 30
  33. 33. YEAR 2008 STATISTICS Table 2: Generation Projects to be commissioned in 2008 Table 3 : Installed vs Peak Demand Survey 32
  34. 34. YEAR 2008 STATISTICS Table 4: Generation Projects to be commissioned in 2009 Table 5: Key Statistics 2008/9 Graph 1: Number of Customers per Employee 2008/9 Graph 2: PERFORMANCE ANALYSIS 2008/9 33
  35. 35. YEAR 2008 STATISTICS Table 6: UTILITY GENERAL INFORMATION APRIL 2008 TO MARCH 2009 Table 7: Annual Maximum Demand Forecast: 2010 to 2025, MW Table 8: Energy Forecast, GWh 34
  36. 36. AUDIT OPINION REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF THE SOUTHERN AFRICAN POWER POOL We have audited the financial statements of the Southern African Power Pool as set out in pages 39 to 51 for the year ended 31 March 2009. Executive committees' responsibility for the Financial Statements The executive committee of the power pool is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. These standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. Basis of Opinion 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 involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of risk of material misstatement of the financial statements, whether due to fraud or error. In making these risk assessments; the auditor considers internal controls relevant to the entity's internal control environment. An audit also involves the evaluation of the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the executive committee, as well as evaluation of the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Audit opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the power pool as at 31 March 2009 and of the results of its operations and cash flows for the year then ended in accordance with International Financial Reporting Standards. ERNST & YOUNG CHARTERED ACCOUNTANTS (ZIMBABWE) 21 October 2009 35
  37. 37. AUDIT OPINION SOUTHERN AFRICAN POWER POOL STATEMENT OF ACCOUNTING POLICIES The following principal accounting policies have been consistently applied throughout the period except as follows: CHANGES IN ACCOUNTING POLICIES The accounting policies adopted are consistent with those of the previous financial year except as follows: The Power Pool in order to comply with IFRS and IFRIC interpretations as of 1 January 2009 with regard to the statement on revenue and revenue recognition in respect of recognised grant income utilised, adopted the systematic pattern of deferring income at recognition to the balance sheet and amortising to the income statement when grant funds are utilised. The change in accounting policy has been accounted for retrospectively and the comparative amounts have been appropriately restated. The principal effects of the change and the statements affected are as follows: IAS 1 ''Presentation of Financial Statements' IAS 8 ''Accounting Policies, Changes in Accounting, Estimates and Errors' IAS 16 ''Property, Plant and Equipment' 2009 Increase in Grant Funds Utilised Increase in Equity Adjustment to Accumulated Funds as at 01/04/2008 2008 01.04.2008 1 598 941 4 291 235 2 692 294 2 692 294 Management exercised professional judgment in re-assessing the residual values and useful lives of all items of property, plant and equipment excerpt items of property, plant and equipment purchased through use of grant funds and items of PPE that had exceeded their useful lives as a date of reassessment. Included in the depreciation charge for 2009 is a change in estimate of USD 713 arising from the decision to depreciate property, plant and equipment on reassessed useful lives. This change in estimate will effect a decrease in depreciation and an increase in carrying amounts of these items of PPE in the future periods. Difference (Decrease in Depreciation) New Depreciation Policy Old Depreciation Policy 713 (10 143) 10 856 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 of foreign currencies to the presentation currency are included in the income statement in the determination of net income. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated pro-rata based on the straight line method to write off the cost of assets to their residual value over their estimated useful lives. Depreciation is charged at the following rates: Computer equipment Office equipment Office furniture and fittings - 33.33% - 20% - 10% An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised. 36
  38. 38. AUDIT OPINION Computer Equipment and Software increased due to the retrospective correction of a prior period error with regard to incorrect accounting for expenditure on software and hardware relating to the Day Ahead Market (DAM) which was expended in the developmental phase instead of being capitalised during the period 2006 to 2008. CASH AND CASH EQUIVALENTS Cash and cash equivalents are defined as cash on hand, demand deposits and short term, highly liquid investments with an original maturity of three months or less, net of bank overdrafts and readily convertible into known amounts of cash and subject to insignificant changes in value. TRADE AND OTHER PAYABLES Trade and other payables are stated at cost. TRADE AND OTHER RECEIVABLES Trade and other receivables are stated at their cost less provision for credit losses. INVENTORIES Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows: Cost is established on the First in First out (FIFO) basis in respect of fuel coupons which are sold to employees. Net realisable value is the estimated selling price in the ordinary course of business. SPECIAL FUNDS Funds granted for specific purposes are accounted for separately as Special Funds on the balance sheet. They are maintained in a separate bank account, any interest earned on the unused funds is credited to, and bank charges are debited to the account. 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 of the obligation can be made. 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 Fund Income Received Fund 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. The accounting policies adopted are consistent with those of the previous financial year except as follows: Interest Revenue is recognised as the interest accrues. Donation Income for specific projects is recognised when the respective expenditure has been incurred. Grant Funds Received Donor grants funds are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Upon recognition grant funds received are deferred to the balance sheet and amortised when grant funds are utilised to best match revenue and expenditure. 37
  39. 39. AUDIT OPINION STATEMENT OF COMPLIANCE The financial statements of Southern African Power Pool have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). PROFIT BEFORE TAX The profit before tax includes the following items: 2009 Depreciation on PPE 1,370,642 Management exercised professional judgment based on ruling market values in an acitve market in determining the residual values and useful lives of items of property, plant and equipment. The effect of this change in accounting estimates is as disclosed below: Difference (Decrease in Depreciation) 713 Depreciation according to new depreciation method (10 143) Depreciation according to old depreciation method 10 856 CORRECTION OF PRIOR PERIOD ERROR Correction in respect of prior period error in respect of DAM Computer Hardware and Software expended instead of being capitalised in the financial period 2007-8 and office equipment not recorded into the asset register upon purchase and not depreciated in the 2008 financial year. Income Statement Decrease in expenses Increase in Profit 4,082,063 4,082,063 Balance Sheet Increase in Computer Equipment and Software Account (at cost) Increase in Office Equipment (at cost) Increase in Accumulated Depreciation on Computer Equipment and Software Account Increase in Accumulated Depreciation on Office equipment Account Increase in Accumulated Fund 38 4 064,803 17,261 1 354,933 5,178 2 721,953
  40. 40. FINANCIALS INCOME STATEMENT FOR THE PERIOD ENDED 31 MARCH 2009 Notes 2009 US$ 2008 US$ INCOME OPERATING INCOME Equal Share for Members Imported energy Exported Energy Peak demand Thermal rating Host member Stem Administration fees Stem Participation Fees Grant utilised Special Fundf Income 219 966 82 488 82 488 54 988 54 988 54 988 1 732 54 392 1 598 941 12 110 206 77 77 51 51 51 50 12 4 407 090 284 284 523 523 523 956 142 000 - 2 217 082 4 985 324 OTHER INCOME Subsidy Income Interest received - Bank Profit/(loss) on sale of fixed assets Interest received - Other Profit on sale of fixed assets Sundry Income 3 343 8 651 360 7 096 8 435 27 885 Total Income 11 11 49 1 18 93 589 936 600 423 815 363 2 244 966 5 078 687 EXPENDITURE Total Expenditure 2 3 610 104 2 386 393 SURPLUS FOR THE YEAR TRANSFERRED TO ACCUMULATED FUND 3 1 365 137 2 692 294 39
  41. 41. FINANCIALS BALANCE SHEET 31 MARCH 2009 Notes FUNDS AND LIABILITIES Accumulated funds 3 4 4.1 4.2 4.3 4.4 4.5 SPECIAL FUNDS - Norwegian Government Grant - Botswana Non Current Portion of Deffered Special Funds - SIDA Grant - DBSA Zizabona Project General reserve Members Contribution Capital Expenditure 2009 US$ 2008 US$ 1 668 844 3 037 277 24 055 100 000 338 012 426 788 617 758 100 000 306 500 895 515 312 715 36 82 124 - 3 437 027 4 613 490 7 1 398 327 2 723 799 6 936 342 879 15 158 241 467 678 134 97 850 903 422 CURRENT LIABILITIES Current Liabilities Portion of Deffered Special Funds Accounts payable Overdraft - Special fund - SIDA Grant 544 505 518 11 52 4.2 5 TOTAL LIABILITIES 97 850 505 518 11 51 ASSETS NON-CURRENT ASSETS Property, Plant and Equipment CURRENT ASSETS Inventory Accounts receivable Cash at bank and on hand Co-ordination centre funds - Special fund - NORAD Grant - Special fund - RNE/SAPP Grant - Special fund - SIDA Grant - Special fund - DBSA 15 478 3 437 027 TOTAL ASSETS MBUERE UA MBUERE CO-ORDINATION CENTRE BOARD CHAIRPERSON DR L MUSABA CO-ORDINATION CENTRE MANAGER DATE 40 978 424 788 618 258 4 613 490
  42. 42. FINANCIALS CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 MARCH 2009 2009 US$ 2008 US$ (1 365 137) 2 692 294 1 370 642 (32 978) (360) 4 443 (8 888) (15 747) 1 372 050 (4 053 113) (49 600) (13 359) (48 025) (51 728) 14 222 (101 412) 230 591 (9 582) (145 335) (2 843) 95 376 (209 488) (11 042) 360 15 747 (1 125) 49 600 13 359 5 064 61 834 CASH FLOWS FROM FINANCING ACTIVITIES Increase/(Decrease) in Grants Received/Utilised Special Project Funds Received Members Capital Contribution Received (94 224) 24 055 31 512 422 262 306 500 NET CASH USED IN FINANCING ACTIVITIES (38 657) 728 762 61 784 581 108 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 1 633 065 1 051 957 CASH AND CASH EQUIVALENTS AT END OF PERIOD 1 694 849 1 633 065 CASH FLOWS FROM OPERATING ACTIVITIES Deficit for the period Depreciation Amortisation of Grant Profit on Sale of Fixed Assets Prior year adjustment Other non cash items Interest Received (Increase)/Decrease in Inventory (Increase)/Decrease in Accounts Receivable Increase/(Decrease) in Accounts Payable NET CASH FROM OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditure Proceeds from sale of Equipment Interest received NET CASH USED IN INVESTING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS 41
  43. 43. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2009 2009 US$ 2008 US$ 1 ACTIVITIES The main object of the organisation is to coordinate the planning and development of the electricity inter-connections between members' respective networks and to expand the Interconnected Power System and electricity trading in the region. 2 Administrative Costs Conferences Workshops & Seminars Repairs and maintenance - Computer Equipment Repairs and maintenance - Office Equipment Repairs and maintenance - Furniture & Fittings Audit Fees Legal Fees Consultancy Fees Postages & Couriers Insurance Printing, Photocopying & Stationery Software Purchases & Maintenance Newspapers, Books & Periodicals Decoration & Gifts Computer Consumables & Networks Bad Debts General Expenses Leasing & Hire Costs SAPP Annual Report Derecognised Assets Special Project Expenses Foreign exchange loss 22 371 166 20 451 66 11 670 1 577 381 6 106 393 826 15 101 234 4 361 1 837 7 369 183 10 504 381 12 110 68 515 Marketing & Publicity Advertising & Promotions Entertainment - 26 150 5 768 14 401 1 992 332 633 18 068 15 121 11 287 18 134 846 200 2 807 50 8 455 42 854 92 1 200 Communication Costs Telephone & Fax Charges Cellphone Charges Internet and email charges VSAT Telecommunications 1 647 318 2 391 15 695 18 186 571 35 529 - Travel & Subsistence Travel - Local Travel - International Mileage Claim Per diem Allowance Accommodation & Meals 2 598 45 990 14 220 27 191 13 499 26 747 66 13 728 18 030 667 5 429 Motor Vehicle Expenses Motor Vehicle Licenses & Parking Fees 42
  44. 44. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS March 2009 Administrative Costs (continued) Depreciation Depreciation - Motor Vehicles & Cycles Depreciation - Computer Equipment Depreciation - Furniture & Fittings Depreciation - Office Equipment 1 359 211 3 397 8 034 10 865 5 015 1 440 1 325 Finance Charges Interest on Bank Overdraft Bank Charges Withholding Tax on Interest 18 1 757 2 232 3 730 6 835 18 223 5 842 835 3 610 104 At 31 March 2009 43 344 983 2 692 294 1 668 844 ACCUMULATED FUND At 1 April 2008 Prior Year Adjustment Surplus/(Deficit) for the year 2 386 393 3 037 277 (3 296) (1 365 137) TOTAL EXPENDITURE 3 250 801 21 625 2 245 644 6 211 3 673 5 461 5 847 482 Staff Costs Basic Salaries Cash In Lieu of Leave NSSA Worker Compensation Insurance Annual Bonus Recruitment Costs Staff Training ESC Staff Training Staff Welfare Subscriptions Allowance Teas & Lunches Staff Uniforms Gratuity Payments 29 209 19 707 2 691 763 303 209 11 040 4 077 2 657 8 945 2 994 4 051 4 323 838 1 348 261 - Occupancy Costs Property Rent Rates, Electricity & Water Charges Cleaning Expenses Repairs & Maintenance - Occupancy 1 358 507 3 542 10 000 3 037 277
  45. 45. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2009 4 SPECIAL FUNDS 4.1 NORWEGIAN GOVERNMENT GRANT - BOTSWANA Balance as at 1 April 2008 Payments: Nordpool Consulting Nexant Incorporation Nexant Incorporation Nexant Incorporation Bank Date 08.04.2008 08.04.2008 23.06.2008 13.11.2008 (437 783) (58 050) (140 904) (189 867) (48 963) (296) 389 Bank Charges Interest Received 97 850 Balance at 31 March 2009 2008 US$ 300 257 487 805 Balance as at 1 April 2007 Advance Payments: Nordpool Consulting Nordpool Consulting Norwegian Water Resources Nordpool Consulting Nordpool Consulting Nordpool Consulting Nordpool Consulting Norwegian Water Resources Nordpool Consulting Norwegian Water Resources Nordpool Consulting SAPP CC Account (DAM Training) Nordpool Consulting Norwegian Water Resources Nordpool Consulting 2009 US$ 505 424 30 115 Bank Date 12.04.2007 02.05.2007 11.05.2007 04.06.2007 13.07.2007 30.07.2007 14.08.2007 23.10.2007 08.11.2007 14.11.2007 23.11.2007 23.11.2007 03.12.2007 28.02.2008 28.02.2008 (283 744) (15 700) (17 317) (2 349) (17 318) (17 318) (17 318) (97 500) (18 810) (17 318) (5 131) (17 318) (957) (17 318) (4 421) (17 649) (955) 2 061 Bank Charges Interest Received 505 424 Balance at 31 March 2008 44
  46. 46. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2009 4 SPECIAL FUNDS (continued) 2009 ZAR Total Payments Nordpool ASA Nordpool ASA Nordpool ASA Norwegian Water Resources & Energy Directorate Eskom Enterprises Enerweb Total Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Interest received Rate variance 09.05.2008 10.02.2008 20.02.2009 20.03.2009 (61 950) 02.05.2008 09.05.2008 02.06.2008 12.06.2008 01.07.2008 01.08.2008 01.09.2008 01.10.2008 03.11.2008 03.12.2008 02.01.2009 02.02.2009 10.02.2009 20.02.2009 27.02.2009 03.03.2009 Balance as at 31 March 45 2009 US$ 518 788 435 059 968 240 (4 561 724) (1 383 500) (3 032 160) (110 833) (35 231) - (746 842) (269 852) (446 334) (17 318) (7 051) (6 287) (2 455) (80) (75) (80) (1 200) (80) (80) (80) (80) (80) (80) (80) (80) (100) (100) (100) (439) (16) (15) (16) (233) (16) (16) (15) (14) (12) (11) (12) (12) (15) (14) (14) (11) 11 314 (290 605) 7 356 558 Additional advance Additional advance 2009 NOK 2 644 181 2 197 000 7 000 000 79 556 - 4.2 NORWEGIAN GOVERNMENT GRANT - NORWAY 895 515
  47. 47. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2009 4 SPECIAL FUNDS (continued) Balance as at 1 April 2007 Additional advance 14.06.2007 2009 NOK 1 364 454.00 4 000 000.00 Payments Nordpool ASA Nordpool ASA Nordpool ASA 14.08.2007 20.09.2007 20.09.2007 (2 197 000.00) (136 000.00) (430 000.00) (376 083.00) (24 408.00) (77 172.00) Total Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges Bank Charges (2 385.00) 02.04.2007 02.05.2007 01.06.2007 12.06.2007 02.07.2007 01.08.2007 14.08.2007 03.09.2007 20.09.2007 20.09.2007 01.10.2007 01.11.2007 04.12.2007 02.01.2008 01.02.2008 02.03.2008 (80.00) (80.00) (1 200.00) (80.00) (80.00) (75.00) (80.00) (75.00) (75.00) (80.00) (80.00) (80.00) (80.00) (80.00) (80.00) (378.82) (12.80) (13.02) (13.00) (200.00) (14.00) (14.00) (13.00) (14.00) (13.00) (13.00) (15.00) (14.00) (15.00) (15.00) - 45 112.00 - 8 348.00 108 287.00 2 644 181.00 518 788.18 4.2 NORWEGIAN GOVERNMENT GRANT - NORWAY Interest received Interest charged Rate variance 01.01.2007 Balance as at 31 March 46 2009 US$ 224 195.00 656 000.00
  48. 48. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2009 4 SPECIAL FUNDS (continued) 2009 NOK (1 081 408) 2009 US$ 11 618 18 562 2 861 37 17.09.2008 02.03.2009 - (32 978) (5 790) (4 028) 02.03.2009 - (23 160) 1 595 (136) 4.3 SIDA GRANT Balance as at 1 April 2008 Additional advance SAPP CC Funding Bank Charges Payments Power Planning Associates SAPP CC (Travel Expenses Transmission Pricing Tariff Study October & November 2008) Power Planning Associates 31.07.2008 14.04.2008 31.03.2009 Bank Charges 36 Interest Received - - 2008 SEK 2008 US$ 140 874 44 355 10.05.2007 05.06.2007 14.08.2007 23.10.2007 05.12.2007 (1 081 408) (267 556) (287 514) (198 621) (327 718) - (174 084) (36 803) (39 548) (27 321) (45 078) (18 000) 06.12.2007 - (7 334) Balance as at 31 March 2009 Balance as at 1 April 2007 Additional advance Additional advance Payments Power Planning Associates Power Planning Associates Power Planning Associates Power Planning Associates SAPP CC Account (Airfares-ASTPWG Workshop & Matlab Software) Eskom Holdings (452) Bank Charges 925 Interest Received 1 081 408 Balance as at 31 March 2008 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 has since come to end after realising its intended objectives. 47 11 618
  49. 49. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2009 4 SPECIAL FUNDS (continued) 4.4 DBSA Balance as at 1 April 2008 Advance Additional Advance SAPP CC Funding Bank Charges Total Payments CORE International CORE International CORE International CORE International 22.04.2008 27.10.2008 18.03.2009 31.03.2009 08.04.2008 03.06.2008 10.12.2008 (138 750) (51 750) (42 000) (30 000) (15 000) (53) Bank Charges 23 Interest Received 0 Balance as at 31 March 2009 Balance as at 1 April 2007 Advance Additional advance 2009 US$ 51 758 42 000 30 000 15 000 22 10.10.2007 23.03.2008 2008 US$ 11 250 51 750 Payments CORE International Interest Received 18.10.2007 (11 250) 8 51 758 Balance as at 31 March 2008 48
  50. 50. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2009 4 SPECIAL FUNDS (continued) 2009 US$ 4.5 ZIZABONA Project Special Project Funds - Balance as at 1 April 2008 Advances BPC NAMPOWER ZESA ZESCO Total Payments Travel Expenses to Namibia Travel Expenses to Zambia Travel Expenses to Botswana Travel Expenses to Zambia Wickwar & Chitiyo Legal Practitioners draft Memorandum of Understanding Meetings in Zimbabwe 26.01.2009 26.01.2009 26.01.2009 26.01.2009 10 001 6 163 10 001 10 001 July 2008 October 2008 December 2008 February 2009 (11 986) (1 451) (2 793) (822) (863) February 2009 March 2009 (5 740) (317) (124) Bank Charges 24 055 Balance as at 31 March 2009 49
  51. 51. FINANCIALS NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2009 2008 US$ 17 773 30 872 255 284 30 872 33 479 82 124 254 810 76 801 11 268 224 988 2 990 13 489 342 879 241 467 ACCOUNTS PAYABLE Provisions United States Agency for International Development (USAID) Development (USAID) Other Accounts Payable 6 26 559 312 715 5 2008 US$ ACCOUNTS RECEIVABLE Trade amounts receivable Prepayments Other accounts receivable 50
  52. 52. FINANCIALS YEAR END 31 MARCH 2009 FIXED ASSETS 5 COMPUTER EQUIPMENT & SOFTWARE OFFICE EQUIPMENT FURNITURE & FITTINGS TOTAL US$ US$ US$ US$ Disposals Derecognised Assets 44 343 8 603 4 064 802 (16 615) (3 462) (915) 44 017 514 17 261 - 35 422 1 925 - 123 783 11 042 4 082 063 (16 615) (3 462) (915) Balance as at 31 March 2009 4 096 756 61 792 37 348 4 195 895 Balance as at 01 April 2008 Accumulated Depreciation (Prior Year Adjustment) Charge for the year Write Offs Disposals Derecognised Assets Adjustments 39 392 1 354 933 26 764 5 178 26 831 - 92 986 1 360 111 1 359 211 (16 272) (3 462) (534) (1 537) 8 034 (2 234) 3 397 (2 132) 1 370 642 (16 272) (3 462) (534) (5 903) Balance as at 31 March 2009 2 731 731 37 742 28 095 2 797 568 Net Book Value as at 31 March 2009 1 365 025 24 050 9 253 1 398 327 Net Book Value as at 31 March 2008 4 951 17 254 8 592 30 797 PROPERTY, PLANT & EQUIPMENT COST Balance as at 01 April 2008 Additions Transfers (Prior Year Adjustment) 6 ACCUMULATED DEPRECIATION 51
  53. 53. NOTES 52
  54. 54. 2009 ANNUAL REPORT Coordination Centre, ZB Life Towers, 77 Jason Moyo Avenue, Cnr Jason Moyo Avenue/Sam Nujoma Street Harare, Zimbabwe Tel: +263 (0)4 250 560/2/3/4/9/92 Fax: +263 (0)4 250 565 P.o. Box GT 897, Graniteside, Harare Printed by PrintWorks