EITI’s efforts to shed light on power contracts can help Zambia deliver its copper ambitions and unlock the mining sector’s economic potential.

Zambia has bold ambitions for its mining sector. The government aims to increase copper production to three million metric tonnes per year by 2031 – nearly four times the 2024 level.

It plans to expand mineral exploration, mining, processing and the domestic supply of goods and services to the industry. Achieving these goals hinges on a reliable supply of electricity.

But there’s a challenge: Zambia’s power grid is struggling to keep pace with demand. Mining already consumes around half of the electricity supplied by the state-owned power company, ZESCO.

The energy sector relies heavily on hydropower, and frequent droughts make the supply unreliable. Many mining companies are importing more expensive power from abroad, while others are turning to independent power producers to fill the domestic shortfall. Meanwhile, only about half of Zambia’s population has access to electricity, and power outages frequently disrupt essential services like healthcare and education.

Transparency in power deals

As mining companies scramble to secure their energy needs, transparency over power supply agreements has never been more critical. Opaque power deals make it harder to attract investment, ensure fair pricing or prevent bad – or even corrupt – deals. Without transparency, utilities can sign contracts that saddle the public and industry with expensive electricity, investors cannot accurately assess risks, and governments risk being exposed to hidden liabilities that often worsen public debt.

As mining companies scramble to secure their energy needs, transparency over power supply agreements has never been more critical.

The Zambia Extractive Industries Transparency Initiative (ZEITI) has stepped up efforts to shed light on ZESCO’s commercial agreements with mining companies. In a sector where, by 2021, ZESCO’s debt reportedly stood at USD 3.5 billion, understanding who buys power and under what terms is vital for accountability and fiscal stability. ZEITI’s online register now provides an overview of active agreements signed by ZESCO, showing the names of mining companies sourcing power, contracted capacity, and contract start dates and duration.

Understanding who buys power and under what terms is vital for accountability and fiscal stability.

However, progress is constrained by familiar challenges: confidentiality clauses primarily designed to protect commercial interests currently block disclosure of relevant provisions, including tariff rates and payment terms.

Thus, while ZEITI’s register offers key information on 11 deals, the agreements themselves are not public. As ZEITI and its partners work towards full disclosure, the register could be strengthened by including information on tariff prices, which would enhance public understanding of the financial terms and risks.

Transparent power deals can:

• Unlock economic potential: Transparent and predictable power agreements can support faster and more competitive deal-making, leading to cheaper and more reliable energy. They can make Zambia’s mining sector more competitive, lower tariffs, boost job creation and increase government revenues. Transparency is also important to shield taxpayers from hidden liabilities that could worsen public debt.
• Close the door on corruption: Public scrutiny can deter favouritism, undue influence and conflicts of interest in decision-making. This impact is even greater when combined with beneficial ownership disclosures, which reveal the individuals behind the companies involved.
• Support an accountable energy transition: Zambia is scaling up solar and wind investments to reduce exposure to drought and meet climate and energy access goals. Transparency helps track how power deals align with national energy transition plans and sustainability objectives.

Public scrutiny can deter favouritism, undue influence and conflicts of interest in decision-making. This impact is even greater when combined with beneficial ownership disclosures, which reveal the individuals behind the companies involved.

Zambia and other mineral-rich countries can use growing global demand for copper and other minerals to unlock the economic potential of their mining sectors. Ensuring that growth translates into broad-based benefits requires strong governance safeguards.

Transparent power agreements are a crucial part of this: they ensure cost-effective, more reliable energy for mining and industry, contribute to attracting responsible investment and build public trust in how the country manages its natural resources.

https://eiti.org/blog-post/keeping-lights-why-transparent-power-deals-matter-zambias-mining-goals