Zambia Signs Energy Sector Agreement for Itezhi Tezhi Power Generation Project

16/04/2014
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The African Development Bank (AfDB), with the Dutch Development Bank FMO, the Development Bank of Southern Africa (DBSA) and Propaco of France on Monday, April 14 signed a USD142 million loan to develop the 120 MW Itezhi Tezhi power project. It is the first public-private partnership energy project in Zambia and is being developed jointly by TATA Africa and ZESCO Limited as an independent power producer, and the Itezhi Tezhi Power Company (ITPC).

Officiating at the signing ceremony, the Minister Mines Energy and Water Development, who was represented by the Permanent Secretary, Mrs Charity Mwansa, noted that the project would inject an additional 120 MW into the Zambian power grid to improve the quality and reliability of power supply. The project will also address problems of recent load shedding due to issues related to power generation. The project is expected to create at least 460 direct jobs for the local population. Benefits expected from the project include clean water and sewerage facilities and reliable electricity service for the local population.

The Bank’s Resident Representative to Zambia, Dr. Freddie Kwesiga, said that Bank’s contribution to the financing package amounted to USD35.5 million. He thanked the Government of the Republic of Zambia for its role in ensuring development and financial closure of the project. He pointed out that the Bank had identified energy as a critical foundation for economic growth and development.  Thus, investment in the energy sector was aimed at reducing the cost of electricity and making supply more reliable and accessible to support mining, rural electrification, agriculture and irrigation which are essential drivers of economic development. He added that in addition to this agreement, in December 2012 the Bank signed a sovereign loan of roughly USD56 million to the Government of Zambia for the construction of a 200km transmission line to send power from the generation site to the capital, Lusaka. Other lenders for the transmission line include the Agence Française de Développement and the European Investment Bank.

The acting Managing Director of ZESCO noted that the development of the Itezhi Tezhi power project has been on the drawing board since the 1970s, so the signing ceremony marked a major milestone that would significantly contribute to Zambia’s power situation. He also said that, once completed, the project would help to address the country’s power deficit. He thanked the lenders for their patience and understanding during the lengthy negotiations.

The representatives from TATA, FMO, DBSA and Propaco also echoed the Bank’s sentiments regarding the importance of this project, saying that the project would provide a showcase for the other public-private partnerships in Zambia, which require patience and commitment to bring to completion.

Also present at the ceremony were the Chinese Ambassador, the French Ambassador, Representatives from Dutch Development Bank FMO, the Development Bank of Southern Africa and Propacao, the French Development Bank, TATA and Officials from ZESCO and ITPC and private sector leaders in Zambia.