|August 13, 2010
Power plant deal signed with China
Zambia has signed an agreement with two Chinese companies to build a 600 megawatts plant expected to cost $1.5 billion, Finance Minister Situmbeko Musokotwane has anounced. According to Musokotwane, the construction of the Kafue Gorge Lower power project in southern Zambia, would start around April 2011, with initial financing of $1 billion expected to come from China. The power plant is expected to be finishd in 2016. Musokotwane also said that a new joint venture company, to be formed by state power utility Zesco and China's Sino-Hydro Company and the China Africa Development Fund, would borrow the initial funding of $1 billion from China to start the project.
Musokotwane noted that the new company would sign a power purchase agreement with Zesco by April 2011 to facilitate the investments into the plant. He said the new joint venture company would borrow funds on its own without the government being part to the new debt and also operate the new power plant for sometime. "Once this company is formed, it will build, operate and transfer the power station (to the government) after the equity partners recoup their investments," Musokotwane said.
According to the government, Zambia currently generates 1,800 MW, with peak power demand estimated at 1,600 MW, but forecasts power demand to rise sharply in the coming years.