AfDB approves US $150-million loan to support access to reliable electricity supply in Zambia

04/10/2013
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The Board of Directors of the African Development Bank (AfDB) approved on Wednesday, October 2 a senior loan of up to US $150 million to finance a 300MW coal-fired power plant as well as the revamping of the Maamba coal mine in Maamba, Zambia. The project aims to tackle a severe environmental concern at the mine caused by the unregulated and spontaneous self-combustion of tons of currently unused low-grade coal while producing much-needed electricity for the country and the region.

The Maamba power plant project will increase supply and reliability of electricity in Zambia which is currently experiencing black-outs and is heavily reliant on drought-sensitive hydro power. Zambia’s hydro power production accounts for 96% of total production, which exposes the country to severe economic risks in case of drought. By capitalizing on readily available low-grade coal resources, and diversifying away from hydropower, the project thus serves as a good example of mitigation and adaptation to climatic changes in the region. The power plant will use well-proven and advanced technology featuring high combustion efficiency and reduced GHG emissions for a lower overall environmental footprint.

The project is being developed by Maamba Collieries Limited, a company incorporated in Zambia in 1971 and privatized in 2010 through a joint venture between Nava Bharat Singapore Pte Limited (NBS) and Zambia Consolidated Copper Mines (ZCCM), a public investments holding company.  

As the transaction’s co-mandated lead arranger (MLA) alongside Absa Capital, a commercial bank from South Africa, AfDB is playing a leading role in mobilizing capital from development finance institutions (DFIs) and commercial financiers, and coordinating the due diligence process for the US $800-million project.

Following the Board’s approval, AfDB’s Division Manager for Infrastructure Finance, Tas Anvaripour said, “After the approval of the Ithezi Thezi hydropower project in 2012, I am delighted to reaffirm the African Development Bank’s commitment to support Zambia’s power sector as it embarks onto the path of energy source diversification and resilience in an increasingly climate change-sensitive environment. By capitalizing on readily available low-grade coal resources that are otherwise left to self-combust in the open air and inflict an environmental burden on the entire Maamba area, the project will produce much-needed power for households, businesses, and Government, while remediating a long-standing environmental concern.”