WB makes headways on funding Zambian power project
- Source: Xinhua
- [19:30 July 10 2009]
- Comments
A senior World Bank official has said the bank had made progress on the design of Zambia's hydropower plant- the Kafue Gorge lower project.
The World Bank and its financing arm- the International Finance Corporation (IFC)- are supposed to fund the extension of the power plant situated in southern Zambia at a cost of between 1. 5 billion US dollars and 2 billion dollars, local newspaper the Times of Zambia reported on Friday.
World Bank Manager for Zambia Kapil Kapoor said in Lusaka that the two institutions were proceeding with the preparation of the project but conceded that the project's execution would be complex.
The IFC said last year that funding for the construction of the power plant would be delayed due to a change of the project site as well as the global financial crisis, according to Times of Zambia.
The World Bank manager said the project would require several policy reforms, especially in terms of the performance of the state-power utility firm ZESCO and the energy tariffs which the government needed to proceed with before potential investors could be attracted to invest in the energy sector.
Zambia's energy tariffs are considered to be low and hindering private sector investment in the power sector. The country is trying to improve its power generation capacity to meet increased demand caused by increased economic activities.
"The infrastructure financing needs of Zambia are significant and can only be met if Zambia is able to attract significant private sector investment," Kapoor said.
Zambia has experienced two nationwide power failure in the first half of this year which highlights the country's urgent need for more power generation.
From June 15 to June 16, Zambia has been hit by a major power blackout,which is affecting the southern African country's seven of the nine provinces, just two weeks after the latest major power cut across the country.
Lucy Zimba, Zambia Electricity Supply Corporation (ZESCO)'s senior manager in charge of marketing and public relations, said at that time in a statement that the power blackout affected the entire country, except in Southern and Western provinces and a few areas served by diesel power stations and small hydropower stations in the north.
"The power failure emanated from a fault at Leopards Hill High Voltage Substation in Lusaka. This led to the loss of power supplies in Lusaka and the rest of the country," Zimba said.
Frequent power blackouts are common in the southern African country where power infrastructure has suffered years of disrepair.
Zambia experienced major power cuts across the country on May 30, which, ZESCO explained was a result of limited power generation at one of its power plants caused by the growth of weeds on a rive which blocked the smooth flow of water to the power plant.
Zambia is currently carrying out a program of rehabilitating its power plants to boost supply, which is currently failing to meet the increased demand caused by the growth in economic activities.
The electricity firm has said it requires about 305 million U. S. dollars for its rehabilitation program.
ZESCO said the country is going into the peak demand period for power, which will end on "some time in August", and the country is currently importing electricity power, which may also be effected when the company unable to import due to wheeling ( transportation) constraints.
Zambia is this year expected to source funds for hydropower projects to improve the southern African's power supply which has faced many problems.
Minister of Finance and National Planning, Situmbeko Musokotwane said earlier that the government would source 400 million US dollars non-concessional loans for hydro projects at its Kariba North Bank and Itezhi-tezhi Power Stations.
The Zambian minister said this in June in a letter to the International Monetary Fund (IMF) managing director, Dominique Strauss Khan that the money would also be extended to other projects related to improving ZESCO.
He said the process of sourcing for non-concessional loans for both the ZESCO and the government had already started, adding that the implementation of new projects to expand electricity generation will likely require borrowing on non-concessional terms.
The state power utility firm has stated that it requires about 800 million US dollars to overcome some short-term to medium- term electricity generation and distribution challenges, ZANIS said.
Currently, ZESCO is extending the Kariba North Bank with works expected to be completed by the end of 2012. On the other hand, construction of Itezhi-tezhi power station is being undertaken by ZESCO and Tata Africa.
The Zambian official further said the government would this year pass a law which would set out rules and procedures for the operation and pricing of the electricity transmission network, a move meant to encourage private sector participation in the country's energy sector.