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AfDB Finance for Zambia’s Electric Power Project

17 June 2008 – The African Development Bank (AfDB) Group on Thursday in Lusaka, signed US$1.2 million grant agreement with the Zambia Electricity Supply Corporation (ZESCO).

AfDB Vice President for Country Policy and Programmes, Joseph Eichenberger, who signed for the Bank, said at a brief ceremony at the ZESCO headquarters that the grant would finance advisory services for two electric power generation projects in Zambia.

The advisory services would prepare the financial and other strategies needed to mobilize financing for the electricity generation projects at Zambia’s Itezhitezhi and Kariba dams. The advisors would also source the financing.

Mr. Eichenberger said good macro-economic management had led to an expansion of the Zambian economy and increased demand for electricity. Electric power generation was, however, failing to keep pace with the growth of the economy.

Unless the production of electricity was raised, Zambia’s economic growth would be constrained, Mr. Eichenberger said.

"This must be done as a matter of urgency," he said. "We’re [AfDB] in a hurry to see that the project is executed."

He added: "A continued shortage of power will negatively affect economic growth in Zambia and the Southern African Development Community."

Zambia has in the last few years experienced rapid growth in demand 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-capitalized and new mines are being opened. These developments require additional electricity.

Recent studies by the Southern African Power Pool, a regional institution, show that Zambia, like the rest of the Southern African Development Community (SADC) region, already requires additional capacity. If this power is not made available soon, economic growth in Zambia and in the region will be curtailed.

The Zambian government and Zesco have responded to this situation with a programme for developing new power stations.

Zesco is developing the Itezhitezhi 120 MW project, with Tata Africa Holdings. The plant will be on Zambia’s Kafue River, some 350 km west of Lusaka — the capital. Zesco is also developing the Kariba North Bank 360mw extension capacity project, some 170km south of Lusaka.

These developments are expected to supply electricity to Zambia’s expanding minerals sector, agriculture and domestic consumption. They will also enhance economic development in these areas, especially in the tourism sector.

Work on the projects is to be completed by mid 2012.