Zambia is a large, landlocked country facing daunting development challenges. Poor infrastructure, notably electricity shortages and a thin and deteriorating road network, is a fundamental impediment to releasing the country’s economic potential, making the economy more diversified and resilient and sharing the gains from growth more broadly.
The project concerns the construction of:
- a new 120MW base load hydropower plant at the site of the existing Itezhi Tezhi dam on Zambia’s Kafue River, and
- a ca. 280 km transmission line from Itezhi Tezhi to Lusaka West via Mumbwa, that will connect the power station to the national grid and thereby to the South African regional network. The transmission line is to be developed, constructed, and operated by Zesco, the state-owned power company, and financed by EIB, AFD and AfDB.
The project, by providing renewable energy for national consumption and export, will help reduce the share of generation of fossil fuels in the Southern African Power Pool (SAPP) and in Zambia. In this way, the project will reduce CO2 emissions by increasing electricity generation from hydropower resources in Zambia for sale into the domestic market and in the region, reducing the SAPP's net power deficit at an economically and financially viable cost.
The project is important for two other projects supported by the EU-AITF, namely the Caprivi Link and the Transmission Line Kafue Livingstone.
The EIB participates in the financing of the hydro power plant via a loan to ZESCO which is used as an equity injection from ZESCO in ITPC, a joint venture between ZESCO, TAHL and others.
The works on the transmission line have started and should be finalised by the end of 2016.
A Technical Assistance grant applies for the funding of the Lenders’ Engineer (LE) to strengthen and accompany implementation capacity of the promoter (ZESCO) for the Project. The LE has to interact closely with the Project Implementation Unit (PIU) for all matters related to physical implementation and financial follow-up (e.g. procurement, disbursement, monitoring, reporting). As the Transmission Line Kafue Livingstone Project has the same promoter and similar characteristics, the same TA (i.e. the same LE) is also supporting the latter project. The Service Contract was signed during the second quarter of 2013. The Lender’s Engineer is currently providing the technical assistance to ZESCO until the summer of 2016.