China doing much more than India to tap resource-rich African continent: Zambia’s energy minister
Zambia’s energy minister Mathhew Nkhuwa talks about Indian firms bidding for the $400 million upgradation contract for the Indeni refinery, learning from India’s evolving green economy
New Delhi: The Chinese are doing much more than Indians to tap the resource-rich African continent, according to Mathhew Nkhuwa, Zambia’s energy minister, who is in India to attend the 16th International Energy Forum Ministerial (IEF—16). In an interview with Mint, Nkhuwa spoke about Indian firms bidding for the $400 million upgradation contract for the state-owned Indeni refinery, learning from India’s evolving green economy to help bring down cost of electricity, and increasing Zambia’s 2,850 megawatt (MW) installed power generation capacity to help meet demand that is growing by about 15% per annum. Edited excerpts.
What is Zambia’s interest in India’s energy sector?
It’s renewable energy really from India that we are interested in because we know that India is well advanced in renewable energy. So, we want to tap into their experience, so that we can develop our renewable energy sector. The cost of the energy is important to us because as politicians it’s our job to deliver to the people. The people must have cost effective service whereby the charge is acceptable. And we know that in India it is happening that way, that’s why we are very delighted to be here.
So, is it India’s record low solar and wind tariffs of Rs2.44 per kilowatt hour (kWh) and Rs2.43 per kWh that have attracted you?
Yes, we have been attracted by the low tariffs and also the way your solar ecosystem is working. We have got a lot of challenges in terms of grid and so on. Solar energy is a bit unstable, infirm in nature. We want to really learn before we get to use it. We are almost getting there to get started. For the two months that I have been in this office, we are also seeing a lot of interest from Indian clean energy developers.
Indian tariffs are much better than the tariffs in other countries. That’s why we want to talk to the Indian side so that we are able to reduce the tariffs. What we want to do is to produce power for our people but at a reasonable cost.
We are buying power at around 11.3 cents per kilowatt hour and the government is subsidizing. We are selling the power to the domestic users at 6.6 cents per kilowatt hour. So, it’s a huge gap that the government is subsidizing and we are selling to the mines at only 9 cents per kilowatt hour. So, if we can bring that (power cost) to about 8 cents per kilowatt hour then we would be happy.
So, you think that solar holds the answer?
Solar and wind will play a very important role in bringing the price down.
What is on the petroleum part that you are looking at in terms of cooperation here?
Transportation fuel is very expensive in our region. We use a lot of diesel because of the mining. The fuel is very expensive in my country because we don’t have a port. So, the port is around 2000 km away. So, it comes by trucks, in turn costing us a lot of money. But we have got a pipeline which was built in 1972. It was an eight inch pipeline which we are now trying to upgrade to a 12 inch pipeline to meet our vehicular demand.
We have got a refinery as well which needs to be upgraded. It’s Zambia’s state-owned Indeni Refinery, which has a capacity to refine around 1 million tonnes per annum (mtpa) of crude. We need to upgrade it. We haven’t done it yet and the tenders went out I think a month ago. There is interest from India and a lot of other companies…Indian companies have tendered…There are state-run firms as well.
Which are these firms?
I can’t tell you that (laughs). In two years time, we need to move away from the high sulphur diesel.
Does Zambia have enough demand to set up a new refinery?
Definitely, there is a big demand; especially with the mines…The traffic is growing with people buying more vehicles.
The electricity demand is also growing, especially when there are new mines that are coming up…Because now, the copper prices are good. And because the copper price is good, everybody wants to bring the copper out from the ground. They are even getting out the low grade copper. If the copper prices are bad, the low grade copper doesn’t get mined. Now, as the price is good, it is getting mined to make money.
We would like a new refinery but at the moment, the plan is to refurbish the older one and put a hydro cracker.
Your former vice-president, Guy Scott told me in an interview that, “If you fly over Africa, and find yourself looking down, you will see football stadium after football stadium. They are all Chinese-built; they are all Chinese-financed.” Has India been able to match pace with China?
At the moment, no. The Chinese are doing much more than what the Indians are doing.
Why is it so?
I think first of all China has probably got more money than India. And the money in China is cheap. So, if you come and bid. For example if your interest rates are at 10%, the Chinese rates are 1% or 2%...So when it comes to bidding, Chinese have got access to cheap money from Exim Bank of China and because of that they are able to win on the bids.
The two stadiums are actually made by the Chinese. And almost all the roads are being made by the Chinese.