Joint UNDP/World Ba-nk Energy Sector Management Assistance Program Activity Completion Report No. 060/86 Country: ZAMBIA Activity: ENERGY SECTOR INSTITIITiONAL REVIEW NOVEMER 1986 Report of the joint UNDP/iMrid Bank Energy Sector Managemem Assistance Program This document has a restricted distribution. Its contents may not be disclosed without authorization from the Govemment, the UNDP or the World Bank. ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM The Joint UNDP/World Bank Energy Sector Management Assistance Program (ESMAP), started in April 1983, assists countries in implementing the main investment and policy recommendations of the Energy Sector Assessment Reports produced under another Joint UNDP/World Bank Program. ESMAP provides staff and consultant assistance in formulating and justifying priority pre-investment and investment projects and ir. providing menagement, institutional and policy support. The reports produced under this Program provide governments, donors and potential investors with the information needed to speed up project preparation and implementation. ESMAP activities can be classified broadly into three groups: - Energy Assessment Status Reports: these evaluate achieve- ments in the year following issuance of the original assessment report and point out where urgent action is still needed; - Project Formulation and Justification: work designed to accelerate the preparation and implementatious of investment projects; and - Institutional and Policy Support: this work also frequently leads to the identification of technical assistance packages. The Program aims to supplement, advance and strengthen the impact of bilateral and multilateral resources already available for technical assistance in the energy sector. Funding of the Program The Program is a major international effort and, while the core finance has been provided by the UNDP and the World Bank, important financial contributions to the Program have also been made by a number of bilateral agencies. Countries which have now made or pledged initial contributions to the programs through the UNDP Energy Account, or through other cost-sharing arrangements with UNDP, are the Netherlands, Sweden, Australia, Switzerland, Finland, United Kingdom, Denmark, Norway, and New Zealand. Further Information For further information on the Program or to obtain copies of completed ESMAP reports, which are listed at the end of this document, please contact: Division for Global and OR Energy Strategy and Interregional Projects Preinvestment Div. IT United Nations Development Energy Department Program World Bank One United Nations Plaza 1818 H Street, N.W. New York, N.Y. 10017 Washington, D.C. 20433 I m 'I I ABBREVIATIONS CSO Central Statistical Office DOE Department of Energy EDI Economic Development Institute (World Bank) ESMAP Joint UNDP/World Bank Energy Sector Management Assistance Program FD Forestry Department FNDP Fourth National Development Plan (1987-91) MLNR Ministry of Lands and Natural Resources MM Ministry of Mines MPTC Ministry of Power, Transport and Communications NCDP National Commission for Development Planning NEC National Energy Council TOE Tonne of Oil Equivalent ZAFFICO Zambia Forestry and Forest Industries Corporation ZEqCO Zambia Electricitv Supply Corporation ZIMCO Zambia Industr; and Mining Corporation TABLE OF CONTEM Page BACKGROUND AND SUMMARYo............................ ..oo.. i I * INTRODUCTION... ..* ..o. ... ..o**.*.....*.*..... ..eoo *. * 1 II. OVERVIEW OF ENERGY POLICY ISSUESe.o..o.... *. .o**o**..**.*. 3 III. INSTITUTIONS IN THE ENERGY SECTOR ......................oat..o. 7 Overviewo.....o .. *.*..e..o...oo..oo......e.oo.o..o.o..o 7 Evolution of the Current Institutional Structures....... 7 Central Government Agencies............................... 9 The Ministry of Power, Transport and Communications..... 9 Other Energy Ministries.. o.... ...o............... ..... 12 The National Commission for Development Planning (NCDP)...o.o....... . .... ............... . 13 The Central Statistical Office (CSO).................... 15 The National Energy Council................. ........... 15 ZIMCO and the Public Energy Corporationso.......... oo. 16 IV. OPTIONS AND RECOMMENDATIONS FOR INSTITUTIONAL REFORM........ 19 Bakgondkoogorooos ounedooooo*oo*oo 19 Strengthening the Coordination of Energy Stvategy and Investments....oo...oo ...o...e.. oo..... o.o.o.ooo. 19 Future of the National Energy Councilouncil.ooooo.....o. 20 Internal Organization and Procedures of the MPTC C.eee.o 22 Internal Organization of the Department of Energyy.o..oo 23 Role of ZIMCO.o... ooo.. . o..ooo. oo..o..oo......... . .oo 24 V. WORK PROGRAMS OF THE ENERGY SECTOR INSTITUTIONSoI.......sees 26 The Need for an Energy Sector Strategy.o......o.ooo.. 26 Energy Data Collection and nalysis................nal si 27 Recommended Work Program of the Department of Energy.... 28 Review of Energy Legislation...........................,, 30 Summary of the Recommended Work Program of the Department of Energy..... ............ ................ 30 Nation-l Energy Council.o.o. ooo oo.. oo.... o.. o. ooo.o..o. 32 ZIMCO and the Energy Supply Corporationssoooo.oo.o.o.... 33 VI. STAFFING, TRAINING AND TECHNICAL ASSISTANCE.oo.....**s..s.. 34 Introduction............... . o... o .oo. .o.o.... ooe..oeo. 34 Staffing Needs of the Department of Energyoergyoo.o..... 34 Energy Staffing Needs of ZIMCO and its Subsidiaries..... 36 Training of Energy Analystsa ly.......o..os ts...s...... 37 Establishment of an Energy Training Course.......o...... 38 Promotion Criteria..... ...o..e ... oo..oo.o... oo..ooooo 39 Technical As sistance..o.o.e. o .. ooo...ooo....eooeooo 39 TABLE 2.1 Zambia - Summxry Energ; Balance, 1985........................ 4 FIGURES 3.1 Internal Strictuire of the Ministry of Power, Transport and Communications. . ........ .  . ....... ....... ***^... 9 3.2 Structure and Staff of the Department of Energy as at December 1985................ 10 4.1 Recommended Structure of the Department of Energy ............. 24 6.1 Long-Term Staffiag Needs of the Department of Energy.......... 36 ANNEXES 1. List of Persons Consulted ............................ **oooo. 40 2. Extract from National Energy Council Act (No. 13 of 1980)............................................ 42 3. New Posts in the Department of Ener g y 43 4. The LEAP Modelling ..........47............. ........... 47 5. Outline of Economic Development Institute Energy Course....... 49 BACKGROUND AND SUMMARY Background, Objectives and Scope of the Report 1. The Energy Assessment aeport on Zambia 1/, issued in January 1983, and the follow-up Energy Assessment Status Report 2/, issued in August 1985, both observed weaknesses in Zambia's energy sector institutions and procedures for energy investment planning and polisy analysis. As a consequence, the country was seen to lack a prioritized and soundly-justified energy sector policy and investment strategy. This in turn was deterring international donors from making commitments to the energy sector at a time when external resources were scarce, yet badly needed to rehabilitate existing energy supply capacity, ensure continuity of production and improve the balance of trade. 2. -his Energy Sector Institutional Review 3/, executed under the Joint UNDP/World Bank Energy Sector Management Assistance Program (ESMAP), analyzes the capability and performance of energy sector institutions and proposes practical solutions to the observed shortcomings. Its objective is to help the Zambian authorities develop energy sector institutions and a planning system capable, perhaps with some initial technical assistance, of producing and continuously updating a sound strategy and investment program for the energy sector. 3. For the purposes of the analysis, the energy sector is defined to include arrangements for the supply, distribution and use of the fuels required to produce heat, light and motive power for industry, agriculture, commerce, households and other consumers. In common with most other developing countries, Zambia's energy sector is seen to comprise two parts: (1) a formal commercial sector where fuels are bought and sold; and (2) a non-commercial (subsistence) sector where fuels are gathered for direct use by consumers. Nowever, the line between these two is not hard and fast and is shifting constantly. 1/ Zambia: Issues and Options in the Energy Sector Report no. 4110-ZA of the Joint UNDP/World Bank Energy Sector Assessment Program, January 1983. 2/ Zambia: Energy Assessment Status Report Report no. 039/' of the Joint UNDP/World Bank Energy Sector Management Assistance Program, August 1985. 3/ The report is based on the findings of a mission by Messrs. Robin Broadfield (ESMAP) and Thomas A. Kennedy (Ccusultant) to Zambia in November-December 1985. - ii - 4. The role and effectiveness of the institutions involved in energy strategy axid investment planning are examined. At the center are the Government Ministries, particularly the Ministry of Power, Transport and Communications (MPTC). It is responsible for oversight of the power subsector and, through its constituent Department of Energy (DOE), for policy advice on a wide range of energy sector issues, including rural and household energy and energy conservation. Jointly with the National Commission for Development Planning (NCDP), the DOE prepared the Energy Chapter of the Fourth National Development Plan (FNDP), spanning the years 1987-91. 5. Other energy ministries include the Ministry of Mines (MM), which is responsible for coal production and petroleum exploration, and the Ministry of Lands and Natural Resources (MLNR), which is responsible for forestry. The National Energy Council (NEC) is a semi-independent statutory body with broad consultative and advisory functions over the whole energy sectore Finally, there are the energy supply corporations, most of which are in the public sector and operate urder the general direction of the Zambia Industrial and Mining Corporation (ZIMCO). Summary of Principal Recommendations 6. A review of Zambia's procedures for energy strategy analysis and investment planning, and of the capability of the institutions involved, suggests that progress has been made in both areas with the preparation of the Fourth National Development Plan. Although the first draft of the plan lacks an integrated strategy for the energy sector and in-depth investment and policy analysis, it brings together many of the issues and investment options that must be considered in the formulation of such a strategy. 7. To further strengthen the process of energy strategy formulation, three principal enhancements to the current system are recommended: (i) designation of a single government agency as responsible 2or overall energy policy and strategy formulation; (ii) provision to that agency, in a timely manner, of essential strategic information on the current and prospective performance and investment proposals of organizations in the energy sector; and (iii) development, in that agency and the energy supply organizations, of the staff capability needed to perform the policy and investment analysis required for energy strategy development. A series of specific, practical recommendations as to how these enhancements could be achieved are set out below. 8. Recommendations for Institutional Strengthening and Reorganiza- tion (a) The Department of Energy in the Ministry of Power, Transport and Communications should formally be given lead responsibility - iii - for the coordination of Zambia's national energy strategy and analysis of associated policy initiatives. (b) The title of the Ministry of Power, Transport and Communications (MPTC) should be changed to the Ministry of Energy, Transport and Communications (METC) to affirm its recommended sector-wide responsibilities. (c) Because it lacks the necessary decision-makir.g authority and its work inevitably duplicates that of the Department of Energy, the National Energy Council should be either: (i) disbanded, and its Secretariat absorbed into the Department of Energy, which would take over sponsorsh.p of the Council's R & D Committee; or (ii) restructured, to make its role explicitly advisory and consultative. In view of its potentially limited impact as an advisory body, the former course of action is recommended. (d) To streamline power subsector planning and policy analysis, consideration should be given to merging the MPTC's Power Stream into the Department of Energy to form a new Electricity Section. (e) To better integrate the work of the Department of Energy into that of the Ministry: (i) regular internal reporting meetings should be established; (ii) the Department should, as a matter of course, be consulted on all energy matters; (iii) all relevant documents should be copied to the Department; and (iv) the Department should ensure that its work is communicated to the rest of the Ministry on a regular basis. (f) To reflect its expanded responsibilities, the Department of Energy should be re-organized into four Sections, compared to the present three, by the addition of the Electricity Section proposed in (d) above. (g) To ensure adequate staffing of the Department, in relation to its proposed responsibilities, the posts of Deputy Director, Senior Economist and a Senior Electrical Engineer should be established and suitably qualified staff appointed over the next !welve months. (h) To facilitate the coordination of energy sector investment analysis and planning, the ZIMCO corporate planning process should be synchronized and integrated with the Government's planning cycle. (i) ZIMCO's Office of the Technical Adviser - Energy should be responsible for the analysis and presentation of investment and policy proposals of the public energy supply corporations and - iv - should be strengthened by the recruitment of a Senior Energy Economist. 9. Priority Tasks of the Energy Sector Institutions (a) The Department of Energy (DOE) should participate in the preparation of a National Energy Strategy. This should be basee on realistic forecasts of energy demand and analysis of existing supply capacity and costs, and outline a least-cost investment program and associated package of policy measures to meet the forecast demand for energy. As indigenous planning capability is limited, outside technical assistance sI.uld be used to complement local manpower resources in its preparation. (b) The DOE's Planning Section should estimate price and income elasticities for energy and individual fuels (an essential element in pricing policy), prepare a systematic program of surveys and analysis to improve the coverage and quality of national energy data, and prepare a regular publication on energy statistics and trends. (c) The DOE's Household and Rural Energy Section shoulli progress from consultative and organizational work into more specific, project-oriented activities. These should include the economic evaluation of suburban household energy options and appropriate rural applications for renewable energy technologies. (d) The DOE's Commercial Energy and Conservation Section should complete a first review of energy conservation potential and options in the industrial, mining and transport sectors, making full use of available technical assistance resources. It should then proceed to outline a national energy demand management program, including: (i) the setting of national and sectoral energy consumption targets; and (ii) the specification of resources and measures to achieve them, including ecoromic energy pricing. (e) The proposed DOE Electricity Section should review the invest- ment proposals of ZESCO for consistency with the national energy strategy and anticipated resource availability and advise on appropriate electricity prices, based on the economic cost of supply and ZESCO's financial needs. (g) To ensure an adequate legal framework for energy policy and planning, the MPTC should work with the Legal Affairs Department to produce a consolidated update of all the laws relating to energy development, production, marketing and use. I. INTRODUCTION 1.1 The objectives of this Report, prepared by the joint UNDP/World Bank Energy Sector Management Assistance Program (ESIIAP), are to review the effectiveness of the institutions and procedures for determining energy strategy in Zambia and to recommend appropriate improvements therein. 1.2 These issues were raised and analyzed in the Zambia Energy Assessment Report, issued in January 1983 under the title "Zambia: Issues and Options in the Energy Sector", and the subsequent "Energy Assessment Status Report" of August 1985. Both these documents stressed the need for institutions and procedures in the energy sector to provide an effective framework for the formulation, prioritization end implementation of a coherant set of energy investments and policies for the sector as a whole. By an "effective framework" is meant a structure of institutions, linkages between them, and clear responsibilities for decision-making which enable issues to be identified, policy and invest- ment options to be analyzed, priorities to be set, actions to be taken and progress to be monitored to ensure that energy is made available in adequate quantities, at minimum cost and used in the best interests of the country and its people. 1.3 A comprehensive "energy strategy", covering both investments and policy, is necessary in Zambia for several reasons. One reason is that there are only a small number of energy suppliers (monopolistic public utilities and oligopolistic oil companies) whose individual actions have a major impact on the market. A second is that, while the elasticity of demand for energy as a whole is low, there is considerable potential for substituting one fuel for another, and hence the elasticity of demand for individual fuels is high. A third is that the energy sector is characterized by considerable international uncertainty, particularly as to the cost and availability of supply and the potential for export, as recent upheavals in the world petroleum market demonstrate. Fourthly, investment costs are often high and lead times long, in a situation where resources are scarce and mistakes costly. Together, these features argue, particularly in the context of a less- developed economy such as Zambia, for some degree of central review and guidance of energy investments and policy through the formulation and implementation of an energy sector strategy. 1.4 The Mission that undertook this review of Zambia's energy planning system began its work in Lusaka on 11 November 1985 and stayed for a period of four weeks. During that time, discussions were held with all the main Government agencies and various other bodies involved in the energy sector (Annex 1). Towards the end of the Mission's visit, a meeting was held with representatives of the Government, the National Energy Council, ZIMCO and ZESCO to discuss an Aide Memoire, which outlined some of the preliminary conclusions of the Mission' s inquiry. There was broad agreement with the Mission's conclusions and with the - 2 - direction of its recommendations. However, contrary views were expressed on some issues which have been L-4en into account in this final report. 1.5 Chapter II of the report summarizes the main characteristics of Zambia's energy situation and the policy and planning challenges which the energy institutions must face over the next few years. Chapter III reviews the role and petformance of the main energy sector institutions in three groups: Central Government; the National Energy Council; and the energy corporations within the ZIMCO organiaation. Chapter IV deals with options and recommendations for institutional reform. Chapter V reviews the work programs of the various sector organizations and recommends some new priority tasks. Finally, Chapter VI deals with staffing, training and technical assistance requirements. i.6 The Mission would like to record its appreciation for the excellent assistance and cooperation which it received from all the individuals and organizations in Zambia with whom it had dealings. Of particular assistance was the Ministry of Power, Transport and Communications, which provided office accommodation, transport, secre- tarial services and much valuable information and advice. - 3 - II. OVERVIEW OF ENERGY POLICY ISSUiES 2.1 In Zambia, as in any economy, the "energy sector" consists of the arrangements for the production, distribution and use of the fuels required to produce heat, light and motive power for households, commerce, agriculture and industry. The objective of the country's energy strategy is to ensure that these resources are supplied and used with maximum efficiency, in accordance with national needs and objectives. 2.2 In common with most other developing countries, Zambia's energy economy is in two parts: (1) a formal, commercial, sector where fuels are bought and sold for household and industrial use; and (2) a non- commercial (subsistence) sector where fuels are gathered, mainly in the rural areas, for direct use by consumers. The significance of this division, from a policy point of view and in the context of the present Report, is that the commercial sector is institutionalized and relatively well-documented, and so amenable to conventional quantitative analysis, policy appraisal and planning techniques. In contrast, the non- commercial sector has little or no institutional framework and is poorly documented, and so requires different methods to assess and improve its performance. The boundary between the two sectors is also not a hard and fast one and is const:antly shifting. For example, the supply of fuelwood has to meet the demands of both cash and subsistence consumers. Similarly, the extent to which the supply of commercial fuels, such as electricity or petroleum products, penetrate the subsistence sector, is itself an important and dynamic ingredient of energy policy, with implications for welfare and the structure of energy demand. 2.3 The energy sector in Zambia has been fully desr-ribed and analyzed in the Energy Assessment and Status Reports of 1983 and 1985. Hence it need not be reviewed in detail here. However, the structure of the country's energy institutions needs to reflect the realities of the energy economy, as well as the policy and planning tasks which are relevant to it. For this reason, a brief recapitulation of the sector's major characteristics may be useful. - 4 - Table 2.1: ZAMBIA - SUMMARY ENERGY BALANCE, 1985 (Million toneies of oil equivalent) Coal and Total Total Petroleum Coke Electricity Commercial Woodfuel Energy Production - 0.4 2.5 a/ 2.9 4.8 b/ 7.7 Imports 0.7 - - 07 - 0.7 Total Primary 0.7 0.4 2.5 3.6 4.8 8.4 SuppIly Transmission/ (0.1) - (0.3) (0.41 - (0.4) Transformation Losses Net Supply 0.6 0.4 2.2 3.2 4.8 8.0 Exports - - (0.7) (0.7) - (0.7) Domestic Final 0.6 0.4 1.5 2.5 4.8 7.3 Consumption of which: Mining 0.2 0.2 1.1 1.5 - 1.5 Industry 0.1 0.2 0.3 0.6 - 0.6 Transport 0.3 - _ 0.3 - 0.3 Household/ - - 0.1 0.1 4.8 4.9 Others a/ Converted on thermal replacement basis (lGwh = 250 toe) _/ Based on preliminary results of UNDP/FAO Wood Consumption and Resource Survey Sources: Department of Energy; FAO/UNDP Wood Consumption and Resource Survey; ZIMCO; Mission estimates. 2.4 As Table 2.1 shows, total domestic energy consumption in 1985 amounted to about 7.3 million tonnes of oil equivalent (mtoe), out of a total primary supply of about 8.4 mtoe. Just over 1 mtoe were exported or used in energy conversion processes. Some of the key features which emerge from the table are: - 65% of total energy is provided by woodfuels; - 20% of total energy (60% of commercial energy) is provided by (hydro) electricity; - 50% of petroleum is consumed in transport and a further 20% in industry; - 60% of all commercial energy is consumed in the mining industry. 2.5 Within the general economic context of persistent stagnation in growth and severe financial and foreign exchange constraints, the major issues of energy policy have been identified as: (a) substitution of domestic for imported energy, where economic; (b) rehabilitation and optimization of existing supply systems; (c) the adoption of appropriate pricing policies and effective conservation measures; (d) development of a national energy strategy, based on realistic estimates of demand, including a prioritized investment program designed to satisfy demand at least economic cost. 2.6 When these broad objectives are translated into specific planning issues, the following are seen as some of the main options requiring review and analysis: Electricity: Extension of the transmission and distribution system to increase the availability of low-cost surplus power and facilitate substitution of petroleum and woodfuels by electricity; Improved maintenance and reinforcement of the power system to increase reliability and reduce losses; Future of power exports, particularly to Zimbabwe; Potential for renewable energy schemes in remote areas. Petroleum: Rehabilitation of the Tazama oil pipeline; Energy efficiency improvements to the Indeni Refinery; Review of opportunities for cost-effective substitution of oil by other fuels, especially in mining and industry; Continuation of the oil exploration program. Coal: Rehabilitation of Maamba Colliery; Improvement of coal marketing and transportation; Feasibility of substituting waste coal briquettes for charcoal in household use. Woodfuels: Development and extension of afforestation and agro- forestry programs; - 6 - Improvement of the efficiency of charcoal manufacture and marketing; Encouragement of greater efficiency in woodfuel and charcoal utilization. Conservation: Promotion of more efficient fuel use in all sectors, especially in transport and industry, through 'good housekeeping' measures and investments, where appropriate. 2.7 The energy institutions should be capable of: (i) analysing these and other key energy sector issues individually; (ii) assessing their interrelationships; (iii) developing a consistent and coordinated energy sector strategy, including appropriate policies and investment projects; (iv) overseeing project implementation and execution; and (v) monitoring project performance and that of existing sector organizations. In order to carry out these functions, the institutions need effective internal 3tructures, qualified staff, clear respcnsibilities, and access to accurate and timely energy data and project information. III. INSTITUTIONS IN THE ENERGY SECTOR Overview 3.1 This chapter reviews the present organization and roles of institutions in the energy sector and identifies certain areas where performance needs to be strengthened. Recommendations and options for dealing with these areas are contained in Chapter IV. 3.2 There are three main elements of the institutional structure in Zambia's energy sector: (a) Central Government, which nominally is responsible for energy policy and planning and for oversight of the fuel industries. The main Ministries concerned are the Ministry of Power, Transport and Communications (MPTC), within which is located the Department of Energy (DOE); the Ministry of Mines, which is responsible for coal and petroleum exploration; the Forestry Department and the Department of Natural Resources under the Ministry of Lands and Natural Resources (MLNR); and the National Commission for Development Planning (NCDP), and Central Statistical Office (CSO)? both under the Ministry of Finance. (b) The National Energy Council (NEC), a semi-independent statutory body, with twelve nominated members and a small secretariat, which has wide advisory and consultative functions over the whole energy field. (c) The Energy Corporations, responsible for fuel supply, which are almost wholly in the public sector and mostly operate under the umbrella of the Zambia Industrial and Mining Corporation (ZIMCO). They include the Zambia Electricity Supply Corporation (ZESCO), Maamba Colliery, Tazama Pipelines, Indeni Refinery, the Zambia Forestry and Forest Industries Corporation (ZAWFICO) and two of the five oil companies which operate in the country. Evolution of the Current Institutional Structure 3.3 Two developments in the 1970s shaped the evolution of institu- tional responsibilities for energy policy and planning. One concerns the organization of the electricity subsector, for long the major supplier of commercial energy in Zambia. In 1970, ZESCO was established as a national supply authority by the amalgamation of a number of separate municipal and other electricity authorities. In so doing, it took over the traditional bulk supply role of the Central African Power Corporation and responsibility for all power transmission and distribution, with the exception of the Copper Belt, which continued to be supplied by the Copperbelt Power Company. The MPTC retained overall political - 8 - responsibility for the industry, but many of the Ministry's technical and supervisory functions were transferred to the new Corporation. The MPTC's Electrical Engineering Department, which had been responsible for the general coordination and monitoring of the former electricity authorities, was dissolved. In the process, the Ministry effectively lost its direct regulatory and planning role in the industry's affairs, and its role in electricity matters became largely administrative. 3.4 The other influential development was the deterioration in Zambia's economic situation, due primarily to the declining price for copper and the second major escalation of world oil prices in 1979. In response to these pressures, it was decided to establish a National Energy Council to provide policy review over the whole energy field. The relevant National Energy Council Act was passed in September 1980 (see Annex 2). 3.5 At an early stage, the Council, aware of its lack of executive authority, urged the MPTC to set up a Department of Energy. There is some disagreement now about whether the intention was primarily to replace the former Electrical Engineering Department or whether it was intended that the Department's mandate should extend over the supply and use of all fuels. Clearly, the Department's direct executive functions could not extend to the operational aspects of coal mining, petroleum exploration antd woodfuels, which were within the jurisdiction of two other Ministries. However, it could potentially exercise such powers in relation to electricity and the end-use aspects of coal, woodfuel and petroleum. Also, if the emerging concept of an "tenergy strategy" was to have any meaning, then clearly the Department, or some other Government institution, had to be concerned with broad energy sector issues, such as interfuel substitution, pricing, conservation, and overall investment priorities. 3.6 In the event, after it was formally set up in 1982, the Department's role developed in the direction of overall energy strategy formulation. This was in large measure due to the priorities set by the first (expatriate) Director, who focussed on the development if data and information systems and basic energy planning techniques and capabil- ities. 3.7 Meanwhile, the National Energy Council saw its role developing in a similar "energy planning" direction, thus creating the conditions for ambiguity in the respective roles and responsibilities of the two organizations. The inevitable result is overlapping functions, duplication of effort and a certain amount of acrimor.y. Before examining options for handling this and other institutional issues, the structure and functions of the full range of energy sector institutions need to be briefly described. - 9 - Central Government Agencies The Ministry of Power, Transport and Communications 3.8 The MPTC is organized in three 'streams', each dealing with one of its principal sectoral responsibilities (see Figure 3.1). As was noted in paragraph 3.3 above, the MPTC lost much of its regulatory and planning role in power with the formation of ZESCO. In consequence, the Power Stream is now very small. The Department of Energy stands alongside the Power Stream, with its Director reporting to the Permanent Secretary, but some of its work comes through Power Stream officials. Figure 3.1: INTERNAL STRUCTURE OF THE MINISTRY OF POWER, TRANSPORT & COMMUNICATIONS MINISTER MINISTER MINISTER OF OF STATE PERMANENT STATE SECRETARY I I ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I Under Secretary I Under Secretary Transport I Power and Communications Transport Stream Power Stream Communications Stream (Asst. Sec., Principal, , Exec. Officer) DEPARTMENT OF ENERGY I Director II Planning and Urban,Household Commercial Energy Administration and Rural Energy and Energy Conservation 3.9 The Department of Energy has a Director and staff of thirteen professionals, organized in three sections: Planning and Administration; Commercial Energy and Conservation; and Household and Rural Energy (see Figure 3.2). Five of the staff are expatriate advisers, working on short-term (2-3 year) contracts, provided through bilateral technical assistance arrangements with Denmark (2 advisers in the Planning Section, and one who acts as adviser to the Director and is his de facto deputy), the United Kingdom (one adviser dealing with Commercial Energy and Conservation), and France (one adviser covering Household and Rural - 10 - Energy). With the exception of the Director, the Zambian proferssional staff are 'elatively young and junior in rank. Because of difficulties in establishing senior positions and recruiting senior local professional staff, the planning advisers in particular have tended to perform a 'section head' rather than an advisory or counterpart role. 3.10 The Department is physically separate from the Ministry headquarters and is housed poorly. The Planning Section and the Director (together with the secretarial and support staff) are located in six small (about 13.5 sq. metre or 144 sq. foot) offices with up to three staff in each. The two computers and peripherals are in one of these rooms and are sometimes out of service because of the heat and humidity. The two other sections each have an office in a separate building and are equally overcrowded. The issue is not simply one of s2aff comfort, although this is by no means unimportant. It also adversely affects working efficiency, relations with the rest of the Ministry, and presents a makeshift image to visitors from other Ministries and organizations. Figure 3.2: STRUCTURE AND STAFF OF THE DEPARTMENT OF ENERGY AS AT DECEMBER 1985 DIRECTOR | - ADVISER (TA, Denmark) : I ' PLANNING COMMERCIAL ENERGY HOUSEHOLD & & AND RURAL ADMINISTRATION CONSERVATION ENERGY 1 Economist 1 Chem Engineer 2 Mech Engineers 2 Planners 1 Elec Engineer 1 Tech Asst 1 Adviser JTA, France) (Computers) 1 Adviser (TA, UK) 2 Advisers (TA, Denmark) Total Staff: 9 Zambian Professionals 5 Zambian Secretarial & Support Staff 5 Expatriate Advisers 19 3.11 The Planning and Administration Section has a staff of six. It has seen as its major tasks as: (i) the development of an energy data system; (ii) the regular updating of energy balances; and (iii) the examination of alternative supply/demand scenarios, with the general objective of formulating a national energy plan. Initially, the data system was set up on the Department's IBM Personal Computer. More recently, it has been enhanced by acquisition of a second computer and a - 11 - simple energy planning model known as LEAP (LDC Energy Alternatives Planning System, described in Annex 4). This model, on which the Departmental staff have been trained, has been used in several other African countries with generally limited results. 3.12 The Section's early emphasis on basic data collection has diminished as there is now a fairly comprehensive data system in existence. However, there are still several major data gaps, especially in the areas of energy consumption, costs, prices and operational information on the electricity and petroleum sectors. In terms of substantive activities, the Section has participated in a countrywide energy survey with the NEC and the University of Zambia and has undertaken economic evaluation of diesel power plants and rural electrification projects. It is also responsible for the Departments budgetary arrangements and general staffing and administrative matters, tasks that have grown in the past year. 3.13 During the latter part of 1985, the Section strengthened its links with other bodies concerned with energy through preparation of the Fourth National Development Plan (FNDP). It shared the Plan secretariat role in the Energy Sector Committee with staff of the NCDP, and was largely responsible for the drafting and coordination of the Energy Chapter. 3.14 The Commercial Energy and Conservation Section is staffed by an electrical/energy conservation engineer and a chemical engineer. An expatriate adviser, provided by the UK technical assistance program, is currently attached to the sectior. The Section's first activity was a series of industrial energy efficiency surveys to assess the potential for improved energy management, economic fuel substitution and the prospects for industrial energy conservation. From the results, it appears there is some potential for cost-effective switching from oil- fired to electric boilers, with substantial cost savings to be derived from cheaper fuel, reduced storage and transport charges and lower maintenance costs. 3.15 Th's initial program identified potential energy savings and provided useful training and experience for the staff (and some industrial managers) in the analysis of conservation options. If it is to be effective, there needs to be: (a) continuous review of the results, in the light of changing fuel prices; (b) follow-up to the initial surveys and audits with plant management and engineers; and (c) an extension of conservation analysis into the heavy energy-consuming sectors of mining and transport. It is intended that these steps be initiated during 1986. 3.16 The Section has also been given responsibility for fossil fuels policy, i.e., the downstream aspects of petroleum and coal. However its expertise in these areas is limited, except for that of the expatriate adviser, who has a long background in the petroleum industry. While coal mining is primarily the responsibility of the Ministry of Mines, as is - 12 - the program of oil exploration, the Section needs local staff with knowledge of the technical, financial and economic aspects of these industries to make an effective contribution in such areas as review of relative investment priorities, pricing policy and interfuel substitution analysis. 3.17 The Household and Rural Energy Section has a staff of two engineers with good potential. There is also an expatriate adviser provided by the French Government. Originally, the Section was concerned with new and renewable sources of energy, but its scope has since been broadened to cover the issues of fuel availability and use by households in the rural, urban and suburban areas of the country. 3.18 The Section's overall aim is the recommendation of specific measures, with the coop-ration of local organizations and communities, to improve energy supply and utilization efficiency in the rural and suburban areas. Its work covers three main sets of activities: - assisting local authorities and other government and unofficial field agencies in formulating and implementing local energy plans; - participating with other institutions in public programs with a significant energy content (e.g., forestry and water supply); and - identifying and helping to establish appropriate conditions for the development and diffusion of cost-effective and reliable renewable energy technologies. 3.19 The Section's program has a strong institutional component, in which it is seeking to act as a catalyst and stimulus in making concern with energy an integral part of the rural, urban and suburban development process. It is adopting a grass roots or "bottom up" approach to energy planning, rather than the more conventional, quantitative, "top down" procedure. This is an imaginative approach which, if combined with economic and financial analysis of policy and investment options, should yield solid results in the longer term. The Section is indeed now seeking to monitor and apply economic appraisal techniques to the supply and use of charcoal; energy options for water pumping, irrigation and small-scale industry; deforestation around the major towns; and economic opportunities for suburban electrification. It will be important to ensure that this second stage of the Section's work gathers momentum and that resources are provided and opportunities are taken to define and undertake such concrete analytical tasks. Other Energy Ministries 3.20 The Ministry of Mines is responsible, under the Mines and Minerals Act of 1976, for all mining operations in Zambia, which, so far as energy is concerned, includes coal mining at Maamba Colliery and oil - 13 - exploration. All mining operations in the country must be licensed, and the mines are required to submit their annual operating programs and details of their financial performance to the Ministry. In earlier years, the Ministry did not have a strong technical capability, but this has been greatly improved by the recruitment of local mining engineers and other professional staff. 3.21 The Ministry gathers performance data on all mining operations, but data on the marketing and distribution of coal is still relatively poor. The relationship between this Ministry and its client industry is, however, in marked contrast to the much weaker links between the MPTC and the electricity undertakings. The former has clear licensing and regulatory functions, arising out of specific legislation, and the technical staff capable of carrying them out. In the case of the MPTC, the Electricity Acts are out of date and the MPTC has few technical staff and no clear regulatory authority. 3.22 The Forestry Department of the Ministry of Lands and Natural Resources is responsible for the management of all Zambia's woodlands and timber resources, including research into their use. The Department, which is of long standing, has its headquarters at Ndola. Its opera- tional activities are undertaken by nine provincial forestry organiza- tions, which are responsible also for the licensing and management of the charcoal trade. This decentralized organization fits in well with the the Department of Energy's approach in the rural and household energy sector, which emphasizes close involvement with local community organiza- tions. However, it has meant that, combined with staff shortages and the lack of good data on forest resources and production, the direction of policy has not always been firm. The FAO/UNDP Wood Consumption and Resource Survey will hopefully improve the information base and provide a clearer framework for policy. The National Commission for Development Planning (NCDP) 3.23 The National Commission for Development Planning dates from about 1980 in its present form. The President of the Republic is its Chairman and the Prime Minister its Vice-Chairman. There is also a Minister of State who reports to the Minister of Finance. At the official level, the Commission has its owni Permanent Secretary and a senior Under Secretary. It has considerable political status and weight, although modifications to its last major planning exercise (the Third National Development Plan 1980-84), contributed to its diminished effectiveness. NCDP is now seeking to re-establish its authority in the planning field with the preparation of the Fourth National Development Plan (FNDP). 3.24 The general background and objectives of the FNDP are described in an NCDP publication "Guidelines for the Formulation of the FNDP", which also sets out the organization and procedures to be followed in the preparation of the Plan. General Committees have been established for macro-economic planning; financial resources; and inter-sectoral - 14 - linkages. They are supported by Sectoral Development Planning Committees, one of which deals with energy. It is intended that these committees be put on a statutory basis and continue in existence A'.er the preparation and launching of the Plan, to be responsible for its implementation and monitoring. It is also intended that the FNDP should be supplemented by annual plans, timed to coincide with the annual Budget, which would proride a framework for regular updating and monitoring of the planning process. 3.25 The Energy Sector Development Planning Committee is a new and extremely important element in the structure of the country's energy institutions. It provides a formal, inter-organizational framework for addressing all aspects of energy development, planning and investment. The Permanent Secretary of the MPTC is chairman, and the Department of Energy and the Planning Commission provide a joint secretariat. There are two sub-Committees, one dealing with Commercial Energy and the other with the Rural and Household sub-sector. The Committee has twenty-five members, drawn from all interested Ministries, the National Energy Council, ZINCO and some of the energy corporations, the University of Zambia and private industry. 3.26 Although the energy chapter of the PNDP was not complete for review by the mission, the broad outlines of its approach were fairly clear from the first draft. The chapter reviews progress during the Third Plan period and forecasts the supply and demand for each fuel up to 1990. The extent to which these forecasts reflect recent changes in international oil prices, the devaluation of the Kwacha and the likely future trend of power exports to Zimbabwe is uncertain. 3.27 The proposed capital projects associated with these demand projections are clearly set out. Several have been the subject of detailed consultants' studies, including the pipeline and refinery projects in petroleum, and the Maamba Colliery rehabilitation in the case of coal. In the electricity sub-sector, the project proposals are drawn from the Power System Master Plan prepared for ZESCO. 3.28 Where the draft Plan is weak is in establishing prioritiest reviewing inter-fuel linkages and appraising the economic and financial viability of proposed projects. This emphasizes the need for greater economic and technical expertise in the energy supply organizations, in ZINCO and in the Department of Energy and/or NCDP. The lack of such expertise is a problem common to many public organizations, Ministries and Departments in Zambia. It stems from a national shortage of skills and the difficulty of attracting and retaining technically qualified and experienced staff at the middle and senior professional levels in parastatal corporations and Government, due to their higher earning potential in the private sector. - 15 - The Central Statistical Office (CSO) 3.29 The Central Statistical Office is a department of the NCDP, the role of which is defined in the Statistics Act (Cap 425 of the Laws of Zambia). It is responsible for the collection of all national statistics and for the recruitment, career management and professional standards of all statisticians employed in the Government. The CSO is headed by a Director and three Assistart Directors who are responsible for nine Divisions, each headed by a Senior Statistician, which deal with National Accounts, External Trade and Payments, Population, Employment and other national statistics. Sectoral work is handled by units within the individual Ministries, such as Agriculture, Health, Education, Mines, etc. and a Statistical Services Unit coordinates central and departmental statistical activities. At present there is nio formal statistics unit within the Department of Energy, which is one reason why the development of energy data systems was a priority task when the Department and the NEC were set up. In addition to the central and departmental units, there is also a Census Administrator in charge of the Field Surveys Division. This is responsible for census offices in the nine Administra- tive Provinces and is available to assist in surveys at the request of the CSO Divisions or other Government Departments. The National Energy Council 3.30 As was noted above, the NEC was formally established in 1980 as a corporate statutory body with wide-ranging powers to undertake analytical and advisory work in the energy field. At the time, it was the only body with overall energy sector' responsibilities. It was clearly intended that the NEC should occupy a central place in the formulation and monitoring of energy policy. 3.31 The Council consists of twelve members, nominated by the Minister (of Power). The present Chairman is a private businessman (formerly the Minister and Permanent Secretary of MPTC). The other members are the former Chairman (now a private businessman), with a similar MPTC background, the Deans of Engineering and Natural Sciences of the University of Zambia, the Secretary General of the National Council for Scientific Research, the General Manager of ZESCO, the Deputy Director of Posts and Telecommunications, the Chief Conservator of Forests, the Manager of Mining and Industrial Technical Services of Zambia Consolidated Copper Mines, and a Senior Economist from the NCDP. They are thus a mixture of private, Governmental and parastatal individuals. Oddly, the MPTC and the Department of Energy are not represented, although they may attend Council meetings as observers. 3.32 The functions of the Council, as defined by law, are to advise the Minister on energy policy, conservation and energy use, installation standards for the supply of energy, energy legislation and energy prices. It is required to submit annual reports on the production, distribution, consumption and pricing of energy, to compile inventories of energy resources, prepare energy demand forecasts, undertake energy - 16 - research and development, and relate energy requirements to other national needs and objectives (a full description of its functions is contained in Annex 2). 3.33 Since 1980, the Council has met about three or four times a year and has made a number of representations to the Government on energy policy issues. It was not until 1984 that it had its own small Secretariat, which consists of a Secretary, an economist and a statistician. The Secretariat has produced one statistical report and collaborated with the Department of Energy and the University of Zambia in carrying out a national energy survey. 3.34 The Council recently set up two committees: one dealing with Investment, Consultancies and Finance; the other with Research, Development and Demonstration. Up to the end of 1985, the first of these had held only one meeting. Significantly, in the course of it, a proposal was made to invite the Council to seek statutory powers to give directives in the energy sector, instead of acting as "mere advisers." The Committee on Research, Development and Demonstration has held several meetings and reviewed developments in biogas, windmills for water pumping, solar energy and improvements in charcoal stoves. So far, its deliberations have not led to any firm proposals for dissemination of the experimental energy projects being undertaken by various academic and other bodies in the country. 3.35 It is clear that the Council has been frustrated by the gulf between its comprehensive mandate and its lack of resources and operational authority. These feelings have been compounded by the formation and growth of the Department of Energy (itself an NEC initiative), which derives operational authority and status from its Ministerial base. Frictions between the two organizations emerged at an early stage, but have been particularly acute in the past two years. Some have been due to poor coordination and lack of consultation between two new and inexperienced bodies, each seeking to establish its identity in the same sector. But there is a more fundamental problem also. A part-time representative body, such as the NEC, no matter how large its secretariat and technical suppsrt, cannot assume the primary funct;ons of Government in the formulation and implementation of energy policy. Nor can it assume the role of the energy supply organizations in identifying and analyzing potential sector investments. Such a body can be advisory and consultative, but no more than that. Hence the NEC, as constituted, can not effectively carry out the complex policy tasks for which it was established. ZINCO and the Public Energy Corporations 3.36 A large proportion of Zambia's commercial economy consists of public corporations, which operate within the framework of the state holding company ZIMCO. ZIMCO was set up in its present form in 1979, partly to regularize the relationship between the individual corporations and partly to loosen the connection between the Ministries and the - 17 - corporations for which they had oversight responsibility. Its wholly or partially-owned subsidiaries and associate companies in the energy sector include: Zambia Electricity Supply Corporation (ZESCO), Maamba Collieries, Tazama Pipelines, Indeni Petroleum Refinery Company, Agip (Zambia), and BP (Zambia) The Zambia Forestry and Forest Products Corporation (ZAFFICO) is involved in forestry and charcoal production. ZIMOIL is the ZIMCO agency responsible for oil procurement, in association with the Ministry of Finance and the Bank of Zambia. Three international oil companies, Mobil, Caltex and Total, operate as independent distributors of petroleum products. 3.37 The managing Board of ZIMCO is chaired by the President, and its members drawn from Government, senior management and the trade unions. The Government representatives are of Ministerial rank, and include the Ministers of Power and Mines, who thus have a watching brief over the energy ir-dustries. Its subsidiary corporations have their own managing Boards on which Government Ministries are represented at a senior official level - normally by Permanent Secretaries. ZIMCO is a bouy of considerable political and commercial weight, with a significant planning and policy advisory ro'e as well Lis direct executive commercial functions. 3.38 ZIMCO is headed by a Director General, who is supported by four Executive Directors for Corporate Planning and Administration, Agricul- ture, Industry and Transport and Energy. There is also a Financial Directorate, with a staff of accountants. The Director of Transport and Energy is responsible for oversight of ZIMCO activities in the energy sector. He is assisted by one experienced technical adviser and a small administrative staff. 3.39 Strategic management of its subsidiaries is exercised by ZIMCO though a formal system of corporate planning, which in principle consists of a five-year plan, together with annual corporate budgets. In practice, the last five-year plan suffered the same fate as the Third National Plan when the economy stagnated in the early 1980s. It was revised several times, but then effectively lapsed, although the annual planning process has continued. Under the latter, ZIMCO issues guidelines to the corporations in November of each year, setting out the general economic background and the financial and physical objectives to be pursued. In the following Ma:ch and April, the corporations' individual plans are submitted to ZIMCO for analysis, coordination and reconciliation in sectoral groups, and are then put before the ZIMCO Board. After the plans have been approved, they are monitored by ZIMCO on a quarterly basis. - 18 - 3.40 The corporate plans are potentially a valuable tool for identifying and prioritizing investments and monitoring corporate and project performance. The approach is comprehensive, in that it sets the activities of the individual corporations within a framework of inter- national and national economic developments. It also provides an on- going system for review of the progress of the ZIMCO group as a whole. Each corporation sets out the assumptions on which its forward plans are based, constraints which have to be overcome, financial targets, and data (past, current and projected) on expenditure, foreign exchange, manpower, productivity and various other performance indicators and ratios. In addition, the plans contain detailed company profiles, as well as sectoral aggregations. 3.41 ZIMCO's corporate planning process is well conceived and constructed. Such weaknesses as exist lie not with the concept, but in the extent to which the required information is provided by each operating subsidiary, projects are subject to appropriate financial and economic anslysis, the subsidiary sectoral and overall group plans are reviewed for consistency and adherence to least-cost principles, and the results monitored and followed-up. The diverse scale of the corporations in the ZINCO group and the varying quality of their managements complicate these tasks. So too does the fact that the resources of the ZIMCO organization, and of the Ministries responsible for monitoring its planning and operations, are limited and inexperienced in the application of planning techniques and in the essential follow-up and reappraisal work. Some of these difficulties are of a practical nature, and can be overcome with greater experience and expanded management training. Others are endemic to a planning system that lacks analytical resources and within which the activities of the energy corporations are not closely monitored. - 19 - IV. OPTIONS AND RICOMMENDATIONS FOR INSTITUTIONAL REFORM Background 4.1 Chapter III described the organizations responsible for the energy sector in Zambia. At the center is the MPTC and its Department of Energy, as well as the Ministry of Mines and the Forestry Department. There is a national advisory and consultative body in the National Energy Council. There is the skeleton of a system of national and sectoral planning in the apparatus for the preparation and implementation of the Fourth National Development Plan. The major energy suppliers and largest energy consumers are grouped under ZIMCO, which has a corporate planning process covering the investment and operational activities of the energy supply companies and some of their major customers. 4.2 Despite this impressive array of organizations, two major shortcomings are evident in Zambia's energy strategy and planning system: (a) Coordination, prioritization and review of energy sector investments and associated policy actions at the national level is weak, largely because no single Government institution has a clear mandate or the skills needed to perform this strategic function; and (b) Technical analysis of energy policy issues and investment options is inadequate, primarily because ZIMCO and its energy producing and consuming subsidiaries lack the necessary manpower resources and technical skills. In addition, there are less fundamental, but nevertheless serious problems of inadequate management communication within and between institutions and excessive pressure on a small number of senior officials and managers, mirrored by shortage of qualified staff and lack of responsibility and activity further down the line. Strengthening the Coordination of Energy Strategy and Investments 4.3 One option for addressing the need for more effective energy strategy coordination is to establish a separate Ministry of Energy, uniting all the Government's sub-sectoral energy activities within a single organization. This has the merits of clarity and simplicity and the potential for strengthening analysis of inter-fuel substitution options and reducing inter-Ministerial conflicts of interest. The single Ministry solution could be achieved by splitting the MPTC into two and creating a separate Ministry of Transport and Communications. The Power Stream and the Department of Energy would form the nucleus of a new Ministry of Energy, which could acquire coal mining and petroleum exploration activities from the Ministry of Mines and the fuel aspects of wood (including charcoal) from the Forestry Department. - 20 - 4.4 Such a radical step has its attractions, but would undoubtedly cause great institutional upheaval and disruption to ongoing work. In the present difficult economic situation, and because there are other options, it may not, on balance, be justified. Hence it is recommended that the existing Government structure be retained, but the option reconsidered at an appropriate juncture, such as a broader re-shuffle of ministerial responsibilities. 4.5 Nevertheless, it is essential to clarify where responsibility lies for the overall coordination of energy sector strategy and review of investment plans. Based on the fact that its current mandate and capabilities most closely match the requirements, it is recommended that the Department of Energy in the MPTC be given this responsibility. To make its mandate comprehensive, it is recommended that the Department also be given direct policy responsibility for review of electricity investment and pricing and the downstream supply aspects of petroleum, coal and woodfuel. Until a Ministerial re-shuffle is contemplated, it is recommended that responsibility for the production aspects of coal and woodfuels and for petroleum exploration remain where it is at present. 4.6 The primary responsibilities of the Department of Energy would be: (a) review of energy sector investment proposals in terms of their consistency with the national energy strategy and anticipated resource availability; (b) prioritization of potential investments in terms of their economic and financial viability and contribution to achievement of the sector strategic objectives; (c) analysis of energy prices in terms of their economic efficiency and the financial needs of energy suppliers and consumers; (d) evaluation of potential interfuel substitution options that would reduce the economic cost of energy supply; (e) provision of technical advice on options for more efficient use of energy; and (f) production and analysis of forecasts and current data on energy supply and demand. In matters affecting coal and woodfuel production policies and petroleum exploration, decisions would be framed by the other Ministries concerned, in consultation with the MPTC. 4.7 Should this recommendation be accepted, in order to clarify and make explicit the resulting broader role of the MPTC, it is recommended that it should be renamed the Ministry of Energy, Transport and Communications (METC). Recommended internal changes in the Ministry and the Department of Energy to equip them to execute these expanded responsibilities are discussed below. Future of the National Energy Council 4.8 This recommended enhancement of the role of the Ministry raises the issue of the future of the National Energy Council. In its original conception, the NEC was clearly intended to play a central part in the formulation of energy policy. For a number of reasons, it has been unable to do this. Some of the reasons are temporary, kich as lack of staff, but others are more fundamental. Although it was set up by statute, it is outside the Government and the policy making process. It - 21 - can advise and make representations, but it cannot implement policy, nor can it have access to all the information and considerations which must be taken into account in policy formulation. Its members are a mixture of private businessmen, academics and Government and parastatal officials. Despite the experience and abilities of its individual members, it has not, in the five years of its existence, succeeded in establishing a true collective identity or having a significant impact on energy policy or planning. 4.9 In addition to the limitations of its diverse membership and lack of executive authority, the Council also lacked an effective admini- strative and organizational link with Government initially. In proposing the establishment of the Department of Energy to provide such a link, the Council in effect underlined its own isolation from the levers of power. For the Department to function effectively, it had to develop its own energy data systems and direct involvement in the energy planning process. In so doing, it inevitably began progressively to take over the stated role of the Council. Because it was centrally placed within the machinery of Government, its authority in energy policy and planning issues soon became considerably greater. 4.10 In practice, and whatever the original intention, it is the Department of Energy which now has the authority, the information base and the resources with which to begin the tasks of formulating and implementing energy policies and strategy. In these circumstances, what should be the relationship of the NEC to the Government, and does it still have a useful function to perform? 4.11 Views about the potential future role of the NEC are sharply divided both inside and outside the Government. On one side it is argued that, while the NEC has clearly not made a significant impact on energy policy, this is due primarily to lack of resources and to uncertainty as to its responsibilities. On the other side, critics claim the NEC has provided little or no useful advice to Government which could not have been given by its members individually; that it has been used as a platform for special interests; that it has no collective identity; and that it can never have genuine authority. It can not ovecome the first three weaknesses because of its diverse, part-time membership. It can not overcome the fourth because it is outside the Government system. On this view, the NEC's role is that of the fifth wheel on the energy carriage. Between these extremes is the view that, if the Council's role was explicitly limited to that of an advisory and consultative body and its membership made more representative, it could have a useful role to play as a 'think tank' and stimulus to Government policy makers. 4.12 The options with respect to the Council are therefore to: (a) Retain the NEC as currently constituted, strengthen the analytical capabilities of its Secretariat, clarify its responsibilities vis-a-vis those of MPTC and increase the - 22 - frequency of its meetings so it can play a more active role in energy policy formulation and review; OR (b) Disband the NEC and make the necessary arrangements to absorb its Secretariat into the Department of Energy; OR (c) restructure the Council to give it a more broadly-based and representative membership and make explicit that its role is purely advisory and consultative. The Secretariat would remain at about its present size, and a regular process of formal consultation should be set up between the Council Secretary and the Director of the Department. 4.13 The major arguments against option (a) are that, (i) made up of part-time members and outside the system of Government, the NEC can not be an effective policy-making body, even with an expanded secretariat and more frequent meetings; (ii) its retention will perpetuate the confusion that exists between its role and that of Government and the energy supply corporations; and (iii) with an extreme scarcity of both skilled manpower and financial resources, the NEC is a luxury which Zambia can ill afford. The major argument against option (b) is that a potential "second opinion" on major energy policy issues would be lost to the Government and energy industries. However, there seem to be many alternative channels, such as the Boards of ZIMCO and its subsidiaries and the Energy Committee of the Fourth National Development Plan, through which such advice could be channelled. The major argument against option (c is that this function could be performed successfully by other bodies, such as appropriate Committees of the Party, the Board of Governors of the University, etc., making the NEC dispensible. On balance, the mission leans towards option (b), although option (c) also has its merits. Option (a), retaining the NEC as presently constituted, seems a certain recipe for continued confusion ind duplication in energy strategy analysis and formulation. 4.14 Irrespective of which course of action is adopted, the work of the NEC's Research, Development and Demonstration Committee should continue. This has provided an important link between research and experimental work on new energy techonologies, conducted by bodies such as the University of Zambia, those responsible for energy policy, and those potentially involved in the manufacture and marketing of more efficient energy-using equipment. The work of the Committee needs to become more action and project oriented, and to have maximum impact, more closely integrated with the process of energy policy formulation. For these reasons, it is recommended that it report to the Department of energy, which would also provide its secretariat. Internal Organization and Procedures of the MPTC 4.15 The Department of Energy has been established as a separate unit within the MPTC, independent of the 'Power Stream', and is physically located away from the main Ministry building. These factors - 23 - have hampered the Ministry's internal communications on ener,y policy issues and hindered the integration of the Department into its operations. To overcome these weaknesses, it is recommended that the Department be brought into closer relationship with the Ministry Headquarters by: (a) Instituting regular and formal reporting meetings between the Permanent Secretary and the Director of the Department; (b) Ensuring that the Department is represented at all Ministerial briefings on energy policy matters and involved in preparations for all meetings of the Boards of energy organizations on which the Ministry is represented; (c) Copying all relevant agendas, minutes, and other documents to the Department and circulating the results of the Department's work automatically to senior ministry officials; (d) Upgrading the Department's accommodation. 4.16 Consideration should also be given to the possibility of merging the Ministry's Power Stream with the Department to form a new Electricity Section, responsible for all aspects of Government's relations with the electricity industry. This would ensure that all relevant adminis.rative, policy and economic issues are taken into account in the planning and conduct of those relations. It might also provide an opportunity for cost-effective economy in the use of scarce manpower. Internal Organization of the Department of Energy 4.17 In a fairly small organization such as the DOE, the allocation of work and of specialized responsibilities cannot be too rigid. Nevertheless, while flexibility needs to be maintained, a clear allocation of responsibilities is essential to achieve effective performance. The following organizational changes are recommended to both clarify section responsibilities and equip the Department of Energy to handle the broader and deeper functions proposed for it: (a) Strengthening of the Planning and Administration Section, which should be responsible for the overall coordination of energy sector strategy and policy; for the assessment of relative energy investment priorities; for review of energy pricing policy; for energy demand and supply monitoring and forecasting and for Departmental administration. (b) Establishment of a new Electricity Section, possibly by merging the Power Stream into the Department. Following such a merger, the Section would be responsible for all electricity policy issues, relations with ZESCO and other electricity authorities, electricity legislation and regulation, and review of power - 24 - generation and transmission and distribution investment proposals. Should the Power Stream remain separate, it would retain its current administrative and regulatory responsibilities for the industry and the Department's Electricity Section should take responsibility for economic and financial review of power investment and pricing issues. The other two existing Sections, dealing with Commercial Energy and Conservatior. and Household and Rural Energy, should continue to exercise substantially the same responsibilities as they do at present. Should these recommendations be adopted, the Department would be structured as in the following diagram: Figure 4.1: RECOMMENDED STRUCTURE OF THE DEPARTMENT OF ENERGY SENIOR MANAGEMENT PLANNING ELECTRICITY COMMERCIAL ENERGY RURAL AND AND SECT ION AND HOUSEHOLD ADMINISTRATION CONSERVATION ENERGY SECTION SECTION SECTION Role of ZIMCO 4.18 Two necessary conditions for the formulation and effective implementation of an appropriate energy strategy in Zambia are that: (a) energy producers propose soundly-appraised investments and appropriate pricing policies that are consistent with the strategy and ensure the nation's demand for energy is satisfied at least cost; and (b) major consumers take cost-effective steps to manage their use of energy and reflect its economic cost in their operations and planning. The strategy-makers in turn need to be familiar with the current operational performance and future investment plans and objectives of the organizations responsible for energy demand and supply. They also need to communicate the sector strategy to those organizations in a clear and effective manner. 4.19 ZIMCO, the parastatal holding company, is in a pivotal position to develop and review the appropriate investment and pricing policy proposals of the major energy suppliers and users. It is also the repository of key information on current and future commercial energy demand and supply. ZIMCO thus has a key role to play in all phases of the strategic energy planning and implementation process. 4.20 It is suggested that ZIMCO's role with respect to the tasks of energy strategy formulation and execution should include the following: - 25 - (a) Communication, to its constituent companies, of the Govern- ment' s macro-economic goals and energy sector strategy, as set out in the five year National Development Plan and Annual Budget; (b) Provision of guidance to the companies in the preparation of their performance targets and investment and pricing proposals to ensure their consistency with the macro-economic environment and strategic energy sector goals; (c) Identification of potential interlinkages or overlaps between the corporate plans of energy 1i;pjliers and consumers and better integration of those proposals, where appropriate; (d) Consolidation of the energy sector investment proposals; review of their economic and financial justification; assessment of their relative priority; and their timely presentation to Government for review and incorporation of the agreed projects into the national energy sector strategy; (e) Communication to the parastatal companies of the resulting decisions with respect to their future performance targets and proposed investment projects; (f) Monitoring of corporate actions and results, vis-a-vis the agreed program, and regular communication to Government of corporate and project performance. 4.21 As was recommended earlier, coordination of the ZIMCO corporate planning system with the Government's annual budget and five year planning cycle is essential for the effective operation of these processes. So too is timely reporting to Government, on the part of ZIMCO and its constituent companies, of current and prospective corporate performance and future investment and operational plans. 4.22 To execute these tasks, ZIMCO will need to strengthen its energy economic and financial analysis capability, and, over time, develop that of its larger energy producing and consuming subsidiaries (ZESCO, ZCCM, Maamba Collieries, Indeni Refinery, Tazama Pipelines, etc.). The office of the Technical Adviser - Energy would be a logical focal point for this work. It would involve the preparation and continuous updating, based on input from the concerned ZIMCO subsid- iaries, of a rolling five year investment program, designed to meet Zambia's forecast commercial energy needs at minimum cost. The program would consist of an optimal mix of energy supply and demand investments that took full account of internal and external resource constraints and opportunities for cost-effective inter-fuel substitution. Associated pricing and other management actions, developed in consultation with ZINCO's finance staff and the relevant subsidiaries, would be clearly spelled out and continually monitored and updated. - 26 - V. WORK PROGCAMS OF THE ENERGY SECTOR INSTITUTIONS The Need for an Energy Sector Strategy 5.1 The most pressing analytical task in the energy sector, in view of the scarcity of investment resources and the importance for economic recovery of ensuring a reliable supply of energy, minimizing imports and maintaining export capacity, is to produce an internally consistent, resource-constrained strategy for the sector. Without this, the already inadequate flow of external investment and technical assistance to the sector is likely to shrink further, forcing postponement of essential conservation, maintenance, reinforcement and rehabilitation projects. 5.2 Despite the considerable effort that went into its preparation, the Energy Chapter of the 1986 Economic Review and Annual Plan did not present a least-cost sector investment strategy, as the document itself explicitly recognized 4/. The prospective projects proposed therein were not all subjected to detailed economic appraisal 5/, nor was the issue of the least-cost mix of alternative fuels adequately addressed. In consequence, and reflecting the shortage of information and inadequate analytical resources available in the energy sector, there is a pressing case for Zambia to receive additional short-term technical assistance in the preparation of an in-depth strategy for the energy sector. This assistance could build directly on the valuable work done in preparing the Annual Plan and FNDP. A national team of experts could be established to collaborate in the ciercise, perhaps drawn from the Energy Committee responsible for preparing the Energy Chapter of the FNDP. This would ensure that full use is made of existing knowledge and expertise. 5.3 Using the FNDP plan demand assumptions, supply projections and investment proposals as a starting point, the proposed strategy study should: (a) develop detailed energy demand profiles for the main energy consuming sectors -- mining, industry, agriculture, transport, commerce and households -- and forecasts of energy exports; (b) estimate the economic costs of supply for each energy product, taking account of potential improvements in productive efficiency; 4/ "The absence of a national energy plan complicates the investment decision-making in this sector...." Government of the Republic of Zambia, 1986 Economic Review and Annual Plan, Chapter XII-, Energy, para. 30. 5/ "The absence of economic and finiancial criteria with which this (rural electrification) exercise was conceived has made this programme a burden to ZESCO..." Op.Cit. para. 24. - 27 - (c) identify the least-cost supply mix of different fuels, based on their economic cost of supply, that will satisfy the forecast demand; (d) specify and justify the investments, pricing decisions and other policy actions necessary to implement that least-cost supply strategy. The end result would be a comprehensive, soundly-justified program of least-cost investments and related policy initiatives in the energy sector. The Zambian authorities could present this program with conviction to international donors and proceed to implement its components with their assistance. Preparation of the energy strategy would result not only in accelerated investment but also in considerable skill transfer to the Zambian organizations involved and a substantive improvement of the energy data base. This in turn would facilitate future energy sector analysis and investment program development and review. Energy Data Collection and Analysis 5.4 A second, longer-term priority is to build on the work done for the FNDP and the proposed energy strategy exercise to improve systems for the collection and analysis of basic energy sector data. On the energy supply side, there is already a basic framework of data on output and sales by the commercial energy industries. Improved information on the supply and consumption of woodfuels will be generated by the FAO/UNDP Wood Consumption and Resource Survey. But there are still many gaps on the resource side, and in the information required for effective monitoring of the performance of the energy industries. This is particularly true in the electricity industry, where the recent Power System Master Plan 6/ drew attention to deficiencies in the operational statistics of the industry. In line with the Plan's recommendations, ZESCO will be establishing a comprehensive System Databook in the course of 1986, which subsequently it plans to computerize. A similar systematic data assembly exercise is required in the coal and petroleum sub-sectors. In addition, all the supply organizations need to review, in consultation with ZIMCO, the Department of Energy and the CSO, the quality and coverage of information on energy product sales. 5.5 In the areas of energy demand and utilization, the facts are even less well-documented. Although the task of improving information is difficult on the supply side, where there are a relatively small number of organizations involved, it is immensely more so on the demand side, where there are several million industrial and household consumers using 6/ Power System Master Plan for Zambia, 1984 - 2004 prepared for the Zambian Electricity Supply Corporation Ltd. by EKONO Oy, Helsinki, Finland. - 28 - a wide range of fuels in many different ways and with widely varying efficiency. The situation is one where gaps caxi only be filled progressively through a program of direct consumer surveys, industrial censuses and improved analysis of sales data from the supply industries. Recommended Work Program of the Department of Energy 5.6 Assuming the recommendation to make the Department of Energy the focal point for Government strategy and policy formulation in the energy sector is accepted, the Department will need to broaden and strengthen its existing activities. The following paragraphs suggest some priority areas where such broadening and strengthening should occur. 5.7 The Planning and Administration Section, in addition to updating the National Energy Balance, gathering energy price data and forecasting future energy demand and supply, should estimate price and income elasticities for energy as a whole and the cross elasticities between individual fuels. This is an extremely difficult and complex task, surrounded by great uncertainty. However, since assumptions about elasticities have to be made if pricing policies are to be rationally based, it is important that they should be explicit and founded on the best possible empirical information and analysis. 5.8 A further task of the Planning Section should be to produce a regular, perhaps quarterly, statistical report on the energy situation, the first issue of which should appear during 1987. Particular attention shoule be paid to the form and presentation of this report so that the policy and planning implications of its contents are clear and comprehensible, not only to those within the energy sector, but also to politicians and members of the general public. Ths use of derived, secondary and comparative statistics, the use of charts &nd diagrams, and the careful choice of units of measurement will be important. (For example, the use of the Joule as an energy accounting unit, while technically precise, is not easy for policy makers and the general public to comprehend, especially in its multiples such as Gigajoules, Petajoules and Terajoules. The use of physical equivalents, such as tonnes of oil, is normally much more relevant in the policy context). 5.9 The Planning Section should also prepare a program of energy data collection, in consultation with the other Sections and energy authorities, to fill known data gaps and those identified by the recommended Energy Sector Strategy exercise. It should not attempt to repeat the overambitious and somewhat ill-prepared national energy survey of 1984, but should concentrate instead on pilot and sample surveys with limited and specific objectives - for example, small village or district surveys of fuel use, or the compilation of information emerging from energy audits in industry. Assistance from the CS0 should be sought, including the possibility of initially seconding an experienced statistician. It should also examine possibilities for collaboration with the CSO's Field Survey facilities in energy survey activities. - 29 - 5.10 At present, considerable effort is being put into mastery and development of the LEAP energy planning model. However, this model deals primarily with physical energy balances and is not used for economic analysis of alternative energy investments -- perhaps the most critical aspect of energy strategy development and certainly the most pressing need in Zambia. This weakness, coupled with its absorption of scarce manpower for data collection and processing, suggest that further development of the model might not be a top priority activity for the Department. To reach an informed decision on this issue, it is recommended that the manpower requirements and capabilities of this model for performing the analyses most urgently needed in the energy sector be reviewed before further effort is devoted to its development. 5.11 The Household and Rural Energy Section should continue to move from its present emphasis on consultative procedures and institutional coordination towards a more substantive program of analytical work. Included in this work should be the evaluation of suburban electrification and other household energy options, including analysis of household energy consumption patterns, household appliance requirements and comparative fuel-efficiency performance, and the economic and social costs and benefits that a program of household energy conservation and substitution might yield. 5.12 With respect to the Commercial Energy and Conservation Section, the aim should be to work towards tLe preparation of a comprehensive national energy conservation program. A first survey of energy efficiency in the industrial sector has already been undertaken, and it is intended that work should now move into the areas of mining and transport. By the end of this year, the Conservation Section should have completed its first review of energy utilization efficiency across the main energy consuming sectors and be in a position to define the major opportunities and steps for conservation and more rational use of energy in national terms. The next stage will be to prepare a follow-up program of action, concentrating on key levers, such as pricing, technical advice on conservation measures and preparation of conservation and substitution investment projects in the most important and responsive consuming sectors. 5.13 The present Technical Assistance adviser in the Conservation Section will complete his initial tour oi duty by the end of 1986. A decision will need to be taken beforehand on whether this support should continue. It should be noted that the present Adviser provides most of the Department's expertise in petroleum matters. Some technical exertise will certainly be needed in this area, even if, in a year's time, the conservation work is capable of continuing under its own momentum. It is therefore recommended that the services of an adviser, wit'h experience in petroleum fuels and energy management, be retained for a further period of two years to continue the on-the-job training of national counterpart staff. - 30 - 5.14 Th.e proposed Electricity Section should be responsible for oversight of investment and pricing policy in the electricity industry. Should it be merged with the Power Stream, it would also acquire administrative and regulatory responsibility for the industry. The Section's primary responsibility should be to advise on the relative priorities of ZESCO's proposed investments in power system rehabilitation and expansion and review the extent to which power prices reflect the economic cost of supply and provide ZESCO with the resources necessary to meet its current and future financial obligations. To execute this role effectively, the Section will need to develop close working relations with the responsible analysts in ZESCO and ZIMCO. Review of Energy Legislation 5.15 One important issue which has a bearing on the effectiveness of central Government institutions in the energy sector is the state of the country's energy-related legislation. The exploitation of agricultural, forestry and mineral resources, as well as the operations of the major energy industries, such as electricity, coal mining and petroleum, are governed by legislation in which the responsibilities of the Government and the various energy suppliers are defined. 5.16 Many of the laws are of very long standing; some even date back to the Colonial and Central African Federation periods, others to the early years of national independence. There have been many changes in circumstances and institutions during that time, and many accompanying amendments to the law. Hence it is now very difficult to gain a clear picture of the legislative framework as it affects the energy institu- tions. In some cases, such as the legislation governing the role and responsibilities of the NEC, experience has also Phown that the law, as currently codified, does not work well. There is now a strong case for undertaking a review and revision of energy-related law to bring it into line with contemporary needs. It is recommended that the MPTC take the lead in initiating such a review, through the Legal Affairs Department, with a view to proposing an updated and consolidated revision of all the laws relating to energy development, production, marketing and use. Summary of the Recommended iork Program of the Department of Energy 5.17 A summary of the Department's recommended work program over the next two to three years and a suggested time-frame for the various tasks is set out below. In addition to undertaking these tasks, the Department should of course play a substantive role in preparation of the recommended national energy strategy. - 31 - Group Task Time Frame Management (a) Prepare a formal proposal for the future organiza- Short tion of the Department, including a recommended Term structure, proposed section responsibilities; and detailed job descriptions for each recommended staff position; (b) Develop a five-year manpower development and Medium recruitment program to achieve the desired level Term and qutlity of staffing; and (c) Initiate a review and updating of existing Medium - legislation prescribing the role of Government in Long energy sector regulation and supervision. Term Planning and Administration (a) Prepare a detailed energy balance for 1985, Short showing the sources and uses of all energy Term resources; (b) Establish a database on current energy prices; Short Term (c) Assess the adequacy of existing energy demand and Short supply statistics, identify major gaps and prepare Term a costed, prioritized program to close them; (d) Estimate demand elasticities and cross elastici- Medium - ties for all major fuels in aggregate and by major Long user group; and Term (e) Prepare a proposal for and outline of a first Medium - Energy Report publication. Long Term Rural and Household Energy (a) Analyze the implications for household energy Short supply and demand of the PAO/UNDP Wood Consumption Term and Resource Survey results and develop, with other concerned organizations, including the Forestry Department and the charcoal industry, an appropriate program of follow-up action; - 32 - (b) Plan and execute a pilot analysis, in a selected Medium suburban area, of the costs and benefits of Term alternative household energy conservation and substitution initiatives, including use of more efficient charcoal stoves, connection to the power grid and the possible use of coal briquettes; and (c) Outline a proposed dissemination strategy for Medium improved charcoal stove prototypes developed by Term the University of Zambia. Commercial Energy and Conservation (a) Complete an initial economy-wide review of the Short - scope for cost-effective energy conservation and Medium substitution, by fuel type and consuming sector, Term based on current estimates of the financial and economic cost of alternative energy resources; and (b) Outline a recommended nationwide energy demand Medium - management program, including justified invest- Long ments, proposed price adjustments to reflect their Term economic cost of supply, and specification of appropriate institutional tasks and responsibili- ties. Electricity (a) Review, in terms of their priority and consistency Short - with the national energy strategy, the power Medium system reinforcement and rehabilitation Term investments and rural electrification projects proposed by ZESCO over the 1986-90 period; and (b) Estimate the economic costs and benefits of Medium - potential future extensions of ZFSCO's power Long transmission system. Term National Energy Council 5.18 Given the uncertainty about the future of the National Energy Council, it is inappropriate to prescribe specific directions which its work might follow, should it be retained. If it is decided to retain the NEC in an advisory capacity, its activities must move away from those which duplicate or conflict with the Department of Energy (such as the collection of statistics, pricing analysis, investment review and energy modelling) and into those which are not directly relevant to Government at this stage. These could include consideration of long-term strategic energy objectives and representing the interests of energy consumers. - 33 - 5.19 Irrespective of the Council's future, the work of its Research, Development and Demonstration Committee should certainly continue, not least because it provides a valuable link with academic and scientific research organizations and with the private sector. To date, much of the work has been exploratory in character. It needs to become more action and project-oriented, with particular emphasis on the dissemination of new technologies, such as improved charcoal stoves, and the establishment of links between research and experimental work on the one hand and manufacture and marketing by the private sector on the other. If successful, it could provide a valuable input into the mainstream work of the Department of Energy, to which it should report. ZIMCO and the Energy Supply Corporations 5.20 In the energy supply corporations, work programs should be determined primarily by comrmercial and market considerations. The ZIMCO corporate planning process already provides a formal framework for the proposal, appraisal and aesessment of their investment and expenditure plans and the monitoring of individual projects and corporate performance. Unfortunately, the energy supply subsidiaries lack adequate technical skill in project identification, appraisal, monitoring and review. For the future, it will be important to strengthen these capabilities and to provide effective coordination between the Corporation's proposals and performance and ZIMCO's corporate planning system. 5.21 ZIMCO itself has a pivotal role to play in the analysis of capital expenditure priorities and strengthening the performance of its subsidiaries in the energy sector. Based on energy demand information provided by Government and its constituent companies and guided by the National Energy Strategy, ZINCO should be responsible for review and integration of the investment proposals developed by the commercial energy supply corporations. ZIMCO should also be responsible for setting financial and physical performance targets for the energy supply corpora- tions, for monitoring their performance against target and for initiating corrective action when performance deviates from target. Close interface will be necessary with Government, which, through the Department of Energy, should review ZIMCO's energy sector investment and performance plans and incorporate the agreed program into the annual budget process and five year rolling national development plan. - 34 - VI. STAFFING, TRAINING AND TECHNICAL ASSISTANCE Introduction 6.1 Almost without exception, the energy sector organizations have identified inadequate staff skills and resources as a major constraint to the quality and quantity of their work. The problems are particularly acute in the Government service, where it is difficult to establish new positions and salaries are uncompetitive with those in the private sector, and only marginally less so in the parastatal organizations. The shortages are especially evident with respect to technical and managerial posts at the middle and senior levels. 6.2 Fortunately, it does not appear difficult for the Government and parastatal organizations to attract young graduates of good quality. However, they can be difficult to retain after they have gained experience and further training. Once in the public sector, such considerations as job satisfaction, status and a concern for public service can be important motivators, provided they are complemented by opportunities for varied work experience, training, exercise of responsibility and promotion. The identification of promising junior staff and the provision of appropriate training and job experience to facilitate advancement at an early stage in their careero should therefore be the major focus of manpower development efforts in the energy sector. 6.3 In the case of technical and specialist staff, this may mean that established promotion criteria, such as the length of service and formal academic qualifications, need to be more flexibly interpreted than in the past. There is no doubt, for example, that given more responsibility, careful supervision and well-focussed training, some of the younger members of staff in the Department of Energy have the potential to qualify for early promotion. This would allow the Department to meet a substantial proportion of its future manpower needs from its own resources and avoid a lengthy and perhaps futile search for experienced candidates from outside. Staffing Needs of the Department of Energy 6.4 The Department's most serious current staffing problem is the lack of experienced Zambian staff to review energy sector investment proposals, analyse policy and propose an energy sector strategy. As a result, the technical assistance advisers have been compelled to take more operational, supervisory and management responsibility than is desirable. Over the next two years, the Department urgently needs to appoint at least five middle-ranking and senior Zambian staff, four of whom would fill the Section Head positions, the fifth the position of Energy Statistician. Plans already exist for establishment of several of these positions. A more determined manpower development and recruiting effort therefore needs to be pursued and possibilities of secondments and - 35 - transfers from other Ministries and agencies actively explored to ensure that they are filled without unreasonable delay. 6.5 Another urgent need is to strengthen the economic capabilities of the Departmentts staff so they can deal more effectively with issues such as the economic and financial appraisal of energy investment projects, pricing analysis and estimation of fuel dehand and supply elasticities. Economic analysis skills are required at both Section Head and junior staff levels. Should non-economist staff be recruited or promoted to fill those positions, special emphasis should be placed on the development of economic skills through training and structured work experience. 6.6 In terms of specific positions, the most urgent requirement, which cannot be met from internal resources, is for the appointment of a Deputy Director. This position is required partly to bridge the considerable gap in seniority between the Director and the other national staff. Much of the Director's work is also of a representational kind, involving liaison with senior policy makers and Ministers. This involves considerable time away from the Department and leaves a management gap which currently is not filled. Appointment of an active Deputy, who could bridge this gap and perform a direct supervisory and managerial role in the Department on a day-to-day basis, is therefore a high priority. Suggestcd terms of reference and qualifications for such a Deputy Director are set out in Annex 3. It may not be easy to find a person who combines the necessary professional experience and technical skills with a strong managerial flair, but, if the NEC were to be disbanded, it is a post for which the Council's Secretary would be well suited. 6.7 A second important post which needs to be established and filled in the Department is that of Head of the Planning and Administra- tion Section. The recruitment of a senior energy economist or energy planner to head this section is a high priority. Proposed terms of reference and qualifications are again set out in Annex 3. 6.8 A third post which needs to be filled urgently is that of Head of the proposed Electricity Section. This is a post of very considerable importance, given the central position which electricity occupies in the Zambian economy. It is evident that the Department currently lacks technical and economic expertise in issues concerning the electricity industry. This has diminished the Ministry's political influence on the industry. It may be necessary to recruit externally for this post, but it is one of those for which intensive training in project analysis and the electricity industry might make an internal candidate appropriate. A job description and suggested qualifications of the successful candidate are again outlined in Annex 3. 6.9 While the bulk of the Department's staff should be professional engineers, economists and energy planners, a number of routine admini- strative tasks also have to be performed, such as budgeting, organizing - 36 - meetings, visits, etc. To avoid using scarce technical resources for this work, the Department needs administrative suppo.t. For this purpose, it is recommended that a middle ranking administrator (senior executive officer or principal) be appointed. 6.10 Other appointments that should follow are the Energy Statisticians Computer specialist, and the heads of the Commercial Energy and Conservation Section and the Household and Rural Energy Section. Secondment of an experienced statistician might be an appropriate way to fill the former position. With appropriate training and further experience, internal candidates could be appropriate for the two other positions. A small complement junior staff will also be needed in each section. Over about a five year period, it is suggested that the Vepartment should aim to develop the professional staff strength shown in Figure 6.1 below: Figure 6.1: LONG-TERM STAFFING NEEDS OF THE DEPARTMENT OF ENERGY DIRECTOR DEPUTY DIRECTOR ____________________ _____ I_ PLANNING ELECTRICITY COMMiERCIAL ENERGY RURAL AND AND SECTION AND HOUSEHOLD ADMINISTRATION CONSERVATION ENERGY SECTION SECTION SECTION Sen. Economist/ Sen. Electrical Sen. Economist/ Sen. Economist/ Planner Engineer Planner Planner Statistician Economist/ Chemical Renewable Planner Engineer Energy Specialist Economist Electrical Mechanical Economist/ Engineer Engineer Sociologist AdminIstrator PlannIng Asst Energy Staffing Needs of ZIMCO and its Subsidiaries 6.11 As was recommended earlier, the primary responsibility for identifying, justifying and supervising a least-cost program of invest- ments in the commercial energy sector should rest with ZIMCO and its constituent energy supply and consuming companies. Over time, both ZIMCO and its associated companies will need to develop small teams of skilled - 37 - engineers and economists fully capable of executing this task. ZIMCO already has the nucleus of such a staff in the office of its Technical Adviser - Energy. This should be strengthened immediately by the appointment of a Senior Energy Economist, whose role it would be to assist the Technical Adviser in formulating ZIMCO's energy investment program and monitoring its implementation. Additional staff should be added to the section as the volume and complexity of the work grows and resources permit, but the section should remain small. Over time, small counterpart units with a mix of economic, engineering and finance skills should be developed in the larger energy supply corporations to strengthen the quality of their project identification, appraisal and monitoring activity. Training of Energy Analysts 6.12 Training of professional staff in the Department of Energy has been quite extensive in the past eighteen months. Almost all the Zambian staff have attended seminars, workshops and other courses on various aspects of energy analysis in Europe and elsewhere. A certain amount of in-service and on-the-job training has also been provided by the five expatriate advisers. However, overseas training is generally not a cost- effective solution and the in-house training has not been very systematic nor always directly related to specific working requirements. 6.13 In view of the shortage of qualified, senior technical personnel in Zambia, the energy organizations must rely on developing their own internal staff resources to fill most of their more senior positions. This will require a considerable and well planned effort to assess the training and work experience needs of individual junior staff and to arrange for them to receive the necessary formal instruction and exposure to the workings of the energy industry and Government. 6.14 To organize continuous and systematic training needs assessment and the provision of appropriate training and work experience opportu- nities for professional staff in the Government and ZIMCO, it is recommended that a senior member of the Department's staff be formally designated the Energy Training Manager and explicitly given these responsibilities. This would be an appropriate major responsibility for the proposed Deputy Director. 6.15 The Training Manager's task would have several dimensions. First, he or she would need to assess, in consultation with the Director of Energy, other senior Government and ZIMCO officials, their organizations' long-term energy staffing needs. Second, he would have to assess the in-house staff resources currently available, if given suitable training and work experience, to fill those future positions. Third, he would have to design an appropriate program of training and work experience for each individual staff member, designed to help them maximise their potential for career development. Fourth, he would have to develop a program of external recruitment designed to fill the remaining gaps in the Organizations' staffing needs. - 38 - Establishment of an Energy Training Course 6.16 The critical skill shortage facing all the energy sector organizations in Zambia is of staff with a good basic understanding of the technologies of energy production, transformation and use and the techniques of economic and financial energy policy and project analysis. The specific skills and knowledge required include a practical grasp of energy demand forecasting methods; estimation of energy supply and demand elasticities and their application; the concept of marginal cost, its estimation and use; the basic technical and market characteristics of alternative forms of energy (power, coal, petroleum, woodfuels etc.); and techniques of investment project analysis (cash flow, shadow pricing, discounting, etc.) using micro computers. 6.17 Unfortunately, these skills, as applied to the practical analysis of issues and options in the energy sector, are not generally taught to the required level in an undergraduate course in economics or engineering. Nor can they be fully assimilated from a one or two month specialist course in energy economics. A third alternative, that of a one year Master's Degree program, can be an effective means of acquiring the necessary skills, but is an expensive option for both the student and sponsoring employer. There is however a fourth option - organization in Zambia of a part-time energy training course, linked directly to the skill requirements of the energy sector organizations, that would teach young professionals these core skills over a period of a year or more. 6.18 The resources to teach such a course are already available in Zambia. The expatriate energy advisers are a major potential teaching resource. The University of Zambia has highly qualified instructors in economics and engineering. Senior staff of ZIMCO, the energy supply companies and local consulting firms are knowledgeable on energy technol- ogies and investment analysis techniques. Experts visit regularly from multilateral and bilateral development institutions. 6.19 Teaching materials are also available from a variety of existing sources. The World Bank's Economic Development Institute (EDI), for example, offers a seven week energy course for which comprehensive instruction material is available. An outline of the course, which closely parallels what is needed in Zambia, is attached at Annex 5. A set of the course teaching materials can be sent to the Zambian authorities for their review. 6.20 In view of the potential high cost and limited effectiveness of alternative manpower development options, it is recommended that the University of Zambia, with assistance from the Department of Energy, organize a part-time, post-graduate energy training course for junior professional Government employees in the energy sector and staff of the public sector organizations responsible for energy supply. The course should be held for perhaps two hours per day, four days per week, so as not to seriously disrupt ongoing work. Students should be required to completer case-work and reading assignments in addition to recei'iing - 39 - practical instruction. On completion, they could sit a brief examination and be awarded an appropriate diploma by the University of Zambia. Promotion Criteria 6.21 The other major difficulty hampering the advancement of Government staff is that, in terms of formal academic training, most junior staff have only a first degree, whereas a second (Masters) qualification can be a requirement for promotion to senior professional posts. Such a qualification is usually obtainable only by full-time study for a year or more, and is thus very costly - not least in the loss of staff time to the employer. In cases where the staff member's work experience and technical skills are particularly strong, there is a good case for waiving this academic requirement. In others, it is a price which the Department will have to pay if it is to develop sufficient senior staff from within. Therefore, it is recommended that provision be made, over the next two or three years, for one carefully selected member of the staff to be seconded for such further education, with a view to their early promotion on return. Technical Assistance 6.22 Many of the Government and parastatal organizations already receive substantial technical assistance in the form of equipment and expatriate advisers. In view of the current shortage of skilled Zambian staff, the need for this will continue for at least the next 3-5 years while local staff resources are developed. In addition, it is recommended that a substantial program of short-term technical assistance be provided to help the Zambian authorities prepare a well-justified least-cost Energy Sector Strategy for the next critical five to ten years. 6.23 It was suggested to the Mission by the NCDP that it too needs an Energy Adviser to assist in sectoral planning work. It was recalled that, in the late 1970s, NCDP had such an adviser, but that the post had since lapsed. However, this was when there was no Department of Energy. For the future, it is probably better that, insofar as the NCDP requires additional advice and expertise in energy planning, it should be provided by the Department of Energy. The Department's staff should therefore make a particular effort to strengthen working contacts with NCDP officials (and indeed those of other sector organizations), a task which will be facilitated by the wc,rk of the joint secretariat which the two organizations provide for the Energy Sector Development Committee. 6.24 One specialist area of the Department of Energy's proposed future work which does call for additional technical assistance is that of statistics. In view of the Department's current lack of statistical expertise, it is suggested that a short-term Statistics Adviser be appointed, for not more than six months, to review the coverage and quality of existing energy data and its presentation, to advise on survey methodology, and to review the compatibility of Zambian energy statistics with international practices and conventions. - 40 - Annex 1 Page 1 of 2 LIST OF PERSONS CONSULTED Ministry of Power, Transport and Communications Mr. N. B. Nyoni Permanent Secretary Mr. F. D. Twmeo Depurty Permanent Secretary Mr. J. K. Chanda Principal, Power Stream (Former Secretary of NEC). Mr. D. J. Mbewe Director, Department of Energy Mr. C. D. Konayuma Energy Conservation Engineer Mr. S. Hibajane Engineer, Rural and Household Energy Mr. L. Chilembo Engineer, Rural and Household Energy Mr. W. Serenje Energy Planner Ms. P. Liswani Energy Planner Ms. E. Nawakwi Economist Mr. F. Musonda Technical Assistant Mr. G. A. McKenzie Energy Adviser (DANIDA) Mr. K. Oksbjerg Energy Economist (DANIDA) Mr. P. Sondergaard Energy Planner (DANIDA) Mr. F. Hayes Fossil Fuels Adviser (U.K.) Mr. N. Lagoutte Renewable Adviser (France) Ministry of Mines Mr. M. Sweta Chief Mining Engineer Mr. P. K. Varma Deputy Chief Mining Engineer Ministry of Finance Mr. F. Siame Financial Director National Commission for Development Planning Mr. B. J. Madubansi Sectoral Planning Department Mr. G. J. Chivunga Sectoral Planning Department Mr. G. C. Mudenda Sectoral Planning Department National Energy Council Mr. g. A. Kashita Chairman Dr. M. Macwani Secretary Prof. F. D. Yamba Member (Chairman R & D Sub-Committee) - 41 - Annex 1 Page 2 of 2 Central Statistical Office Mr. G. C. Sicilima Acting Director ZESCO Mr. N. S. Mwale Manager, Enginieering Services Mr. R. Nyberg Chief Engineer Mr. D. K. Kundu Senior Engineer ZIMCO Mr. P. J. Chisanga Director Energy & Transport Mr. M. V. Muhsin Director of Finance Mr. M. Pethiyagoda Technical Adviser, Energy Management Services Board Mr. R. Mataka Director Energy Systems Research Group Mr. F. Ackerman Consultant, Boston, USA. - 42 - Annex 2 Page 1 of 2 EXTRACT FROM NATIONAL ENERGY COUNCIL ACT (No. 13 of 1980) The Act provided for the establishment of a National Energy Council, and laid down its composition, functions, powers and other related matters, as per the following extracts: Composition of the Council 4. (1) The Council shall consist of the following members - (a) the Chairman; (b) two representatives of the University of Zambia who shall be nominated by the Vice-Chancellor; (c) two persons who shall have had experience in matters relating to commerce and industry; (d) two persons who shall have had experience in matters relating to engineering and energy; and (e) not more than five other persons. (2) All members shall be appointed by the Minister. Functions of the Council 7. The functions of the Council shall be to - (a) advise the Minister on - (i) energy policy; (ii) matters relating to the conservation and use of energy; (iii) environmental policy in relation to energy; (iv) minimum standards to be prescribed with regard to the quality and reliability of supply of energy and associated installations; (v) any legislation affccting energy; and (vi) the provision of adequate safety of employees. (b) submit to the Minister such recommendations as it may deem necessary to safeguard the interests of users of energy; - 43 - Annex 2 Page 2 of 2 (c) advise the Minister with regard to any scale of charges proposed by any supplier or distributor of energy; (d) at least once a yea-, compile and submit to the Minister detailed patterns of national production, distribution, consumption and pricing of energy; (e) relate the energy requirements of Zambia to other national needs, and advise the Minister as to the best methods of meeting the national energy requirements and of using any shared resources; (f) from time to time, compile inventories of energy resources, forecasts of trends of production, consumption and pricing of energy; and (g) undertake, whether alone or in conjunction with others, research and development in the field of energy. Powers of the Council 8. The powers of the Council shall be to - (a) regulate the custody and use of its common seal; (b) call for reports, data or information relating to energy or the development of any shared energy resource, from any person or organization in Zambia; (c) appoint suitable persons to investigate, or conduct a study of, and report on, any matter falling within the functions of the Council as it may, from time to time, deem necessary; (d) authorize any person to enter into or execute any agreement of contract on behalf of the Council for the purpose of carrying out its functions; (e) provide support for energy projects by way of grants or loans, the provision of accommodation or equipment, or by the common or other use of equipment as it deems fit; (f) do all such things as appear to it to be desirable or expedient in order to carry out its functions. - 44 - Annex 3 Page 1 of 3 NEN POSTS IN THE DEPARTMENT OF ENERGY 1. Three posts have been proposed in the Department of Energy which are considered essential in the restructuring and strengthening of the Department recommended in Chapter 4. They are: Deputy Director Senior Economist/Planner (Head of Planning Section) Senior Electrical Engineer (Head of Electricity Section) The following paragraphs outline the suggested job descriptions, terms of reference and qualifications for the three posts. Deputy Director 2. The Deputy Director will support and assist the Director as required in all matters relating to the work and organization of the Department of Energy and will act for him in his absence. The Deputy will, in addition, be directly concerned with the day-to-day running of the Department, directing the work programs of the specialist sections, and supervising the work and career development of the staff. While sharing with the Director the tasks of advising Ministers and senior officials on energy matters, and developing and maintaining contacts with senior managements and planners in other Ministries, the fuel industries and other relevant bodies, the Deputy Director will be closely involved in the regular and on-going duties of the Department and its staff. He should be a major source of new ideas and initiatives in the Department, and in consequence he will need to have a sound grasp of the energy sector and the responsibilities of the Department, as well as good organizing ability and an understanding of the methods and techniques of energy analysis. He should be particularly concerned with the needs of the professional staff in matters affecting their career development, training and professional standards. 3. The Deputy Director will need to work closely with the Director to ensure that energy covsiderations and interests are reflected in all relevant activities of Government. He will need to be able to communicate these interests, as well as new ideas and policies which will often have a high technological content, to other Ministries and organizations in the energy sector at a high level. 4. It is unlikely that his original professional background and training will have been in energy studies, but could well be in the fields of engineering, applied science or economics, with working experience in Government or industry. Personal qualities of drive, management flair and flexibility in outlook would be important requirements. - 45 - Annex 3 Page 2 of 3 Senior Economist/Planner 5. The Senior Economist/Planner will be Head of the Planning and Administration Section in the Department. He will be responsible to the Deputy Director and the Director for leading, supervising and coordinating all the work of the section and for the delegation of work to the staff as required. The work of the Section is in two main areas: Planning and Administration. 6. The Planning section's activities will include responsibility for the coordination of all energy planning activities in connection with the preparation and implementation of the Fourth and any subsequent National Plans, and Departmental reviews and analysis of the corporate plans of ZIMCO and the energy corporations. The Head of Section will be responsible for economic and financial appraisal of investment programs and projects, and for the general monitoring of the overall energy situation in Zambia, as well as external issues and developments which are likely to affect it. He will be expected to oversee the work of the energy statistician in maintaining the Department's data and information systems and computer models and oversee the preparation of up-to-date energy balances and forecasts of energy supply and demand. In addition to undertaking and directing the analytical work associated with these activities, he will be responsible for ensuring that the results of analysis are presented in ways which are comprehensible and relevant to policy makers. He will also be responsible, in all these activities, for liaison with economists and planners in other Ministries (especially the Ministry of Finance and NCDP) as well as with the energy corporations and academic institutions. 7. The Administration Section's work will consist of ensuring that the internal organization and activities of the Department are efficiently run, that meetings are properly serviced and recorded, that staff matters are properly dealt with, and that the Department's budget is prepared and expenditure is monitored and controlled in accordance with the practices and needs of the Ministry. 8. The qualifications required for this post will be a Master's degree or equivalent in economics, applied science or engineering, and at least five years relevant work experience in applied economics, preferably involving energy. The emphasis of much of the work will be economic, and the candidate should be capable of demonstrating considerable economic analysis expertise. Because of the need to direct and initiate work in the energy field, the holder of the post will need to show evidence of drive, imagination and supervisory abilities. It is expected that the holder of the post will, at least in the early stages, be assisted by an expatriate adviser. Senior Electrical Engineer 9. A Senior Electrical Engineer will be required to head the proposed Electricity Section. The Section will be responsible for all - 46 - Annex 3 Page 3 of 3 the energy aspects of the electricity industry. This will include monitoring the performance and investment programs of the industry and for such regulatory duties as are required by the country's electricity legislation. 10. The successful candidate will need to work closely with, and have the confidence of, the electricity authorities. This will require technical understanding of the principles of electricity generation, transmission, distribution and use and the practical problems which they involve. The post is not an exclusively technical one, but will also have considerable economic content in the appraisal and assessment of alternative policy options. In this area, the holder of the post will need to be able to work closely with other professionals in the Department. 11. At least in the early stages, and until the full regulatory role of the Ministry has been defined, the Electricity Section will be small. For this reason, as well as for the constitutional relationship between the Ministry and the electricity authorities, it will not be the job of the Department to review daily the operational activities of these authorities, but rather to ensure that the Ministry has full knowledge about the industry's performance and problems. For this reason, the Senior Electrical Engineer will need an understanding of the data relating to the industry's performance and efficiency in electricity generation and distribution. 12. In addition to academic qualifications as an electrical engineer, the holder of the post should have post-graduate professional qualifications or relevant working experience of at least five years. He should show evidence of an interest in the practical and policy issues involved in the electricity sub-sector and its place in energy policy and overall economic development. - 47 - Annex 4 Page 1 of 2 THE LEAP MODELLING SYSTEM 1. In November 1985, the Department of Energy acquired the hardware and software associated with the LDC Energy Alternatives Planning System model (LEAP). A short training program was held to introduce its procedures and capabilities to the staff of the Department and the NEC. LEAP is a simple modelling system which was devised with the special requirements of African countries in mind, taking account of their dependence on woodfuels and the importance of the rural sector. It is a system of seven separate computer programs which can be used independently or together to assemble data and generate energy projections. 2. The system starts with a Demand Model based on the current consumption of fuels (electricity, kerosene, fuel oil, charcoal, etc.) by final users in different sectors and sub-sectors (industry, agriculture, households, etc.). When aggregated, this produces total demand requirements which can be projected forward according to various specified fixed or variable growth rates or changes in consumption patterns due to changing technology or other economic factors. 3. These final demands can then be turned into demands for primary fuels (crude oil, hydropower, coal, wood, etc.) through the Transformation Model which contains the various conversion coefficients relev&nt to the processes of electricity generation, oil refining, charcoal production, etc. (i.e., how much crude oil is needed to produce X tonnes of final products such as gasoline, kerosene or fuel oil, or how much wood is needed to produce Y tonnes of charcoal). 4. From this requirement for primary fuels a Resource Model calculates the resource and land use implications of providing the primary fuels. In the case of oil; this could be simply the imports of crude; for coal it could be local production or imports; or for wood it could indicate (on the basis of input data about forest yields) the amount of land needed for given levels of production. 5. Each of these resource requirements can be costed on various input assumptions about prices and costs. Different scenarios and options can be compared in a Costing Progam which can include the effects of variations in interest rates, foreign exchange needs, etc. 6. There are, in addition to these four sub-models, three Macro Programs: (a) A Demographic Program which can deal with the effect of population growth or the shift between rural and urban location on energy and final fuel demand; - 48 - Annex 4 Page 2 of 2 (b) An Agriculture Program, which provides a representation of the agricultural sector and land use which can be used as inputs to the Demand and Resource models. tc) An Economic Program, designed to model and forecast national economic activity at the macro level such as GDP, imports, exports and income distribution for use as inputs into the other models. 7. The whole system, though seemingly elaborate, is basically a very simple series of arithmetical processes and is in no sense a dynamic or optimising model. It depends for its effective use as a planning tool on sound data relating to fuel consumption patterns and realistic input assumptions about production functions and technical coefficients. For example, the whole system rests on the validity of the pattern of final fuel consumption and on assumptions about the socio-economic factors which could cause it to change. As is well known, these are precisely the areas of greatest uncertainty and weakest data in most developing countries. OUTLINE OF ECONOMIC DEVELOPMENT INSTITUTE - w_ j IR A Coe. Opq qg (1) N5'QI (3) A=Off= 1 (5) MIQUI 2 (6) MIA (8) A Jgltc & E l Acts. GW/CWP Lid Use Fost Cearg Egy in bL & Tpt. A.-nti Maket ionm Food Pra}ctin PRoof_or__i & Potental for k1 Feonmic of Laid Plamm C an Sodalin Eff. NArIL (2) MlMQIAL (4) D(IMD (7) DEMI) (9) = IEWLgm M1M5 1 1 2 1IATn; 1 F :C6TDIQ 3 aKdM of Society ogfs at Prod. Posiblity E&Ofc Projection F Factos affecting Hlloeld Enew Pties ad Maretis Dapi.y Foecasts Urban ad Rural ICuzrrS Flow .INlAD (ID) ImD (12) BECNMIC (14) OlIC (15) EoIIIC (17) FaCWX&I 4 FCWXATDI 6 PFR SMM 2 PRINCiUBM 3 PRISCJIN 4 Na F4Ier? F8tsas/ Elasticity of Cadepts of C0:zdal Eneg Policis affectin SuVply, Demid Margial Costs Pricing B I equrs Demd Price A Coe Study 2 DNAD (11) EColIC (13) EGIQMIC (16) HOW (18) IWCMr= 5 PRDiCPIE 1 PRIIBfl 4 Electric Poser Supply and Dmwud 6es ad * Awacy, Prifpl Chmr and FM law-TM Wals Alternative Pmr0a Surpls Maginl Costs Ahn ntroductimi Tecd _ . Ia : - l - - a - - inw w m - (19) (21) (23) (24) (26) U'PL SUE I SUFfi SIM 3 SUIPLY SIMX 5 SUPPLY SIM 6 SUPPl XS1 8 Yof Paer Wood Fuels Cotbeiml and is and and Mliiy4ro OIl d Go and Chrcoal. Uicga 3 (2O) SUI.Y SIhE 4 (22) (25) (27) SUFfIX SIM 2 SUPPLY SUE 7 G IN CANI Pef mes PM Alcohol The Word Batc Solar Energy (28) (30) (32) (33) (35) lCTRlC PGWEt 1 ThR&& lWUW I TR5ft W1G4 3 TRA6FCRAn1 4 TK 6 en N Wood Milltg Wood Alcohol RI and Petrlo Paer System and Iarvstg tral .os Products nlaM Petro-chentcals 4 _ _ _ _ _ _ _ _ _ _ .__ _ _ ___ _ (29) (q TRaFCrrIQ 5(34) (36) E1:rIC MOR 2 1RWC8WIQI 2 Electric Power TRAEFCIQN 7 Fuelwod ad lydro, Q,l 011, CEoal DI Total Syateu Qucoel P Gm, Gas Turbims, Cde, Ga, Synf l Ahlysis aid Dieel, Cablned Probem la, Nuclew 00 _ . IUD Fb -~~~~ - m .AT m - .- . - I I s, (37) (39) (41) (42) (44) lIfR ORUMN 8 1 a:IC AAGIUSIS 2 EO((HI MLISBB 4 EOWNIC ALISIS 5 DW BAT 2 Mind 7te Diacomt Rate Sbadm Pric£g Altenative m Solar Ohu (Vpportty Tradeables d A Case Study GeCtherml cot of Capltal Nxt4rraeables S (38) (40) (43) (45) ECIoQIC AIWBS 1 EMaIC AIA51S 3 HEW= UAI 1 U UlER M ea of The P_ Case AllINcII 1 IN Me Tile Vabje Project wbth Scearo An Introductim of Mmiy MethoW1 to the Program (46) (48) (D)) (52) (54) , CIPUIUR DOUHMJR 0M1UJR OMRUJER APL 8 CH"P mRm M A1JCffIGI 2 Q IATL ri 4 AFPIICgrITM 6 IiPe Data Pare Report WIqT(AL hVut Daiud aput Rmm:.e Rim Bse Case Alteniave 2 Data (&pply) Data Program Rum Program Use of Cae ter Hamdao- Ivatnictim Hads-c Iiutructicx Hands-u instruction Hams-nm Irstructin and/or 6 .. Report Preparatim (47) (49) (51) (53) (55) 0209M aiM (XQUE APEL. 7 aCD=R APPL. 9 alP Partii ts Only NMRIQCrIG4 3 AWL1CXrIG 5 Input Data Inpt Data Prear Report Di Iqxut Trawfor,mtl Ipat Cost Alternative 1 Alternative 3 Data Data Rmun Pr Run Pror BwAsifr LuMtmeticm Hands-onIawta Hamb-in Instrxtfr Hnd W m Is,n ztrctimi o - 52 - Pae4of 4 1B .~~~~~~~~. ,~H ______. Hi I _____ liii! _~~~ N13 13 ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM Activities Completed Date Completed Energy Assessment Status Report Papua New Guinea July, 1983 Mauritius October, 1983 Sri Lanka January, 1984 Malawi January, 1984 Burundi February, 1984 Bangladesh April, 1984 Kenya May, 1984 Rwanda May, 1984 Zimbabwe August, 1984 Uganda August, 1984 Indonesia September, 1984 Senegal October, 1984 Sudan November, 1984 Nepal January, 1985 Zambia August, 1985 Peru August, 1985 Haiti August, 1985 Paraguay September, 1985 Morocco January, 1986 Niger February, 1986 Project Formulation and Justification Panama Power Loss Reduction Study June, 1983 Zimbabwe Power Loss Reduction Study June, 1983 Sri Lanka Power Loss Reduction Study July, 1983 Malawi Technical Assistance to Improve the Efficiency of Fuelwood Use in Tobacco Industry November, 1983 Kenya Power Loss Reduction Study March, 1984 Sudan Power Loss Reduction Study June, 1984 Seychelles Power Loss Reduction Study August, 1984 The Gambia Solar Water Heating Retrofit Project February, 1985 Bangladesh Power System Efficiency Study February, 1985 The Gambia Solar Photovoltaic Applications March, 1985 Senegal Industrial Energy Conservation June, 1985 Burundi Improved Charcoal Cookstove Strategy September, 1985 Thailand Rural Energy Issues and Options September, 1985 Ethiopia Power Sector Efficiency Study October, 1985 Burundi Peat Utilization Project November, 1985 Botswana Pump Electrification Prefeasibility Study January, 1986 Uganda Energy Efficiency in Tobacco Curing Industry February, 1986 Indonesia Power Generation Efficiency Study February, 1986 Uganda Puelwood/Forestry Feasibility Study March, 1986 Date Completed Project Formulation and Justification (cont.) Sri Lanka Industrial Energy Conservation- Feasibility Study March, 1986 Togo Wood Recovery in the Nangbeto Lake April, 1986 Rwanda Improved Charcoal Cookstove Strategy August, 1986 Institutional and Policy Support Sudan Management Assistance to the Ministry of Energy & Mining May, 1983 Burundi Petroleum Supply Management Study December, 1983 Papua New Proposals for Strengthening the Guinea Department of Minerals and Energy October, 1984 Papua New Guinea Power Tariff Study October, 1984 Costa Rica Recommended Tech. Asst. Projects November, 1984 Uganda Institutional Strengthening in the Energy Sector January, 1985 Guinea- Recommended Technical Assistance Bissau Projects April, 1985 Zimbabwe Power Sector Management April, 1985 The Gambia Petroleum Supply Management Assistance April, 1985 Burundi Presentation of Energy Projects for the Fourth Five Year Plan May, 1985 Liberia Recommended Technical Assistance Proj. June, 1985 Burkina Technical Assistance Program March, 1986 Senegal Assistance Given for Preparation of Documents for Energy Sector Donors' Meeting April, 1986