Govt approves new mining, electricity policies to boost investment, economic growth

The Cabinet has approved the establishment of a Special Purpose Vehicle (SPV) for investment and trading in mineral resources in the mining sector.

Chief Government Spokesperson, Cornelius Mweetwa, announced this shift from the dividend payment model for mineral resources during a media briefing in Lusaka on Wednesday.

The government would now adopt a production-based sharing mechanism to ensure that the benefits accrue to the people of Zambia beyond statutory obligations.

Mweetwa noted that Zambia had traditionally used the dividend payment model for investment in mining assets.

“Going forward, the implementation of the new business model will allow for the actual sharing of minerals produced and enable the government to negotiate its own prices for the minerals,” the minister said.

He highlighted that this would guarantee revenue from the sale of minerals and ensure the correct declaration of mineral composition for consignments designated for export and domestic use.

Additionally, it would ensure the availability of raw materials for local companies engaged in value addition.

Furthermore, Mweetwa announced that the Cabinet had also approved Open Access to electricity transmission and distribution lines, which involved the separation of the system operator function from ZESCO.

This included the creation of an Independent System and Market Operator (ISMO) and the establishment of an open access market structure and regulations.

“Cabinet has found it necessary to make such a progressive policy decision, which aligns with the Energy Policy and the Electricity Act,” Mweetwa said.

He stated that the market structure and open access regulations would promote non-discriminatory access to the transmission and distribution networks.

The minister added that this would foster competition by giving consumers alternative sources of electricity, leading to better quality services and lower prices.

The decision would further encourage investment in transmission and distribution infrastructure, as third-party users would pay for network use, generating sufficient revenue for network owners to develop and maintain the grid.

Mweetwa stated that this policy would also promote investment in generation and security of supply, as more power producers would invest in generation.

The proposed open access market structure is expected to enhance electricity security of supply, supporting the government’s industrialization and economic diversification agenda.

“It will lessen the financial stress on ZESCO because an Independent Power Producer can sell directly to a big consumer such as a mine without ZESCO being forced to be the off-taker,” the minister said.

Mweetwa further announced that the Cabinet approved the promulgation of two proposed Statutory Instruments to introduce Net-Metering Regulations and Distribution Grid Code Regulations in Zambia, as provided in the Electricity Act No.11 of 2019.

He explained that the introduction of these Statutory Instruments would encourage investments in net-metering generation and promote self-reliance among consumers.

“It will ensure the reliability and stability of the power system and non-discrimination against renewable energy sources integrated into the national grid, reducing the burden on the national grid and freeing up electricity for other economic activities,” Mweetwa said.

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