Chinese Clinch Kafue power deal

ARTHUR SIMUCHOBA
Correspondent | Wednesday August 25, 2010 00:00

Last week, three Chinese companies - the China Africa Development Fund, the China Development Bank and the Sino-Hydro Power Company and the Zambian government - signed a MoU which sets out the roadmap for the construction of the massive power station that is expected to be completed by 2017. 

It is envisaged that when completed, the KGL project will benefit all Southern Africa Power Pool (SAPP) countries because even with increasing power demand, especially by the booming mining sector, Zambia is unlikely to gobble up KGL 750MW capacity.

'We expect construction to start around April or May next year. We do not want power shortages to create constraints in further economic growth,' Finance and National Development Planning Minister, Dr Situmbeko Musokotwane, said at a press briefing. 

Under the roadmap, Sino-Hydro, the Chinese electricity company, which is already undertaking the extension and upgrading of generation equipment at the Kariba North Bank, Zambia's second largest power station, will be the first on site to carry out preparatory works, including the construction of access roads and other auxiliary facilities.

According to the blueprint, the China-Africa Development Fund, Sino Hydro-Power and the Zambia Electricity Supply Corporation (ZESCO), will form a joint venture company in which the Chinese will be the majority shareholders with 65 percent while the Zambian para-statal will have the remaining 35 percent.

The new company has been mandated to borrow US$1 billion from the China Development Bank while the equity partners will provide the remaining US$1.5 billion.

Under the arrangement, Sino-Hydro Power Company and China Africa Development Fund are to submit a proposal to the government by January 2011.

Energy experts say KGL power station would come in handy because, it is bound to produce a regionally significant surplus that other countries in the SADC region that are equally stretched for power will be able to use.

Zambia has been upgrading its electric power. It is already, for instance, developing another 120MW power station in conjunction with Tata Company of India.   

The Bank of India has already extended US $ 500 million loan for its construction. More recently, the Copperbelt Energy Corporation (CEC) announced that it was also investing more than US$140 million into the development of a 40MW hydropower station in the North West Province near the Angolan border. (Sila Press Agency)