EIB grants €50 million for 120MW Zambian hydro plant

The EU’s long-term lending arm, the European Investment Bank (EIB), has granted €50 million ($65 million) to support a new 120 MW hydropower plant and long-distance transmission line in Zambia, with the aim of supplying power to southern Africa.

Expected to be completed by 2015, the $375 million project comprises the construction of the plant at the existing Itezhi-Tezhi Dam and a 291km transmission line to Lusaka that will connect the power station to the national grid and the Southern African Power Pool.

The scheme is being developed by Itezhi-Tezhi Power Corporation, with utility ZESCO and Indian conglomerate TATA each having a 50% share. Power from the plant will be transmitted through the Itezhi Tezhi –Mumbwa-Lusaka West transmission line to the national grid.

“Evacuation of power through this line will significantly reduce the challenges facing ZESCO and help to meeting enormous demand for power arising from expansion of the customer base and growth in mining, agriculture, commercial and domestic sectors,” said Cyprian Chitundu, managing director of ZESCO.

The funding agreement finalising EIB support for the joint plant and project was formally signed in Lusaka by Zambian minister of finance, Alexander Chikwanda, managing director of utility ZESCO Cyprian Chitundu and representatives of the European Investment Bank.

“Increased production of green energy will lower the cost of importing electricity to Zambia and reduce reliance on coal-generated power,” said Pim van Ballekom, EIB’s vice president responsible for lending in sub-Saharan Africa.

“The European Investment Bank recognises the detrimental economic impact of power shortages in the region and is committed to supporting long-term investment in key energy infrastructure across Africa.”

He added: “The impressive Itezhi-Tezhi [hydro] project complements the European Investment Bank’s support for upgrading the Kafue Livingstone transmission line provided earlier this year.”

The Itezhi-Tezhi hydropower project uses an existing dam on the Kafue river, which will minimize the cost of the project and limit environmental impacts. This was constructed in the early 1970s to regulate water flow for the Kafue Gorge Power Station further downstream.

This is one of a number of projects intended to increase hydropower generation for the regional electricity network, the Southern African Power Pool, improve energy connections between countries in the region, reduce Zambia’s power deficit and reliance on imported electricity from coal-based power stations. Electricity generation by ZESCO in Zambia is almost entirely based on hydropower plants on the Zambezi and Kafue rivers.

Additional financing for the project will also be provided by the French Development Agency (AFD), African Development Bank, FMO, PROPARCO, Development Bank of Southern Africa, Republic of Zambia, TATA and the government of India.

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