The agreement was signed here by ZESCO managing director, Rhodnie Sisala, and the AfDB vice-president Joe Eichenberger.
But apart from the AfDB, there is also the Development Bank of Southern Africa (DBSA), KFW of Germany and ZESCO itself in the funding package for the transaction advis ory services for the two power plants to be built.
This is the first step towards the construction of two hydro-electricity generating plants known as the Kariba North Bank extension project and the Itezhi-tezhi project which are both estimated to cost US$ 550 million by the time they are fully completed and up and running in 2012.
"Like the rest of the Southern African Development Community (SADC), Zambia already requires additional capacity. If the power is not made available soon, econ o mic growth in Zambia and in the region will be curtailed," Sisala observed.
He noted that Zambia had, in the last few years, experienced rapid growth in dem and for electricity.
"The main drivers of this demand are the growing mining sector, the industrial and commercial sectors, as well as agriculture. Old mines are being re-capitalise d and new mines are being opened. These developments require additional electrici t y," he said.
Consequently, ZESCO is developing the Itezhi-tezhi 120-MW project, with the financial muscle of Tata Africa Holdings - an Indian company - at a cost of about US $ 200 million.
This plant is being sited on the Kafue river, 350 kilometres west of Lusaka, and it will be made up of two generators, each with a 60-MW output and it will have two transformers and associated switchgear as well as a new transmission line that will carry power to the national grid running through Lusaka to the Copperbelt.
This project will be developed through a special purpose company called Itezhi-tezhi Power Corporation Limited whose shares will be owned by ZESCO and Tata Afri c a Holdings.
The other project on the cards is the Kariba North Bank Extension Project with a 360-MW electricity generating capacity that will be built at a cost of more tha n US$ 350 million about 170 kilometres south of Lusaka, next to the current Karib a North Bank power station.
This project will comprise two generators, each with a 180-MW output and it will also have two transformers, two cables and associated switchgear and it will be on the Northern bank of the Kariba dam which is shared with Zimbabwe on the southern banks.
The project will be developed through a special purpose company called the Karib a North Bank Extension Power Corporation Limited.
To develop the two projects, therefore, ZESCO had to engage a transaction advisor with expertise in legal, financial and technical matters.
"The advisor will help ZESCO package the project to ensure it is bankable. The a dvisor will prepare the project documentation, and also prepare and negotiate po w er purchase agreements with offtakers. The advisor will also mobilise project fi n ancing," Sisala observed.
This means that the funding of US$ 1.2 million secured from the AfDB will be split in half so that a package of US$ 600,000 will go to Itezhi-tezhi and Kariba N o rth Bank Extension Project respectively.
Lusaka - 24/06/2008
Pana
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