ZESCO Limited, through Kafue Gorge Lower Development Corporation, has signed a contract with Sinohydro Corporation for the development of the 750 megawatt Kafue Gorge Lower power station.
The power station is to be constructed in Chikankata district at a contract sum of US$1.4 billion with a completion period of 51 months.
The contract entails engineering, procurement and construction and financing projects in the energy sector.
Acting managing director Victor Mundende said in Lusaka yesterday that the demand for electricity in Zambia has been growing steadily at an annual rate of four to five percent in the last few years and is now at around 1,948 megawatts.
“Supply and generation capacity on the other hand has remained fairly stagnant over the past 30 years despite Zambia’s rapid economic growth averaging six percent in the last five years,” Mr Mundende said.
He said the forecast for electrical power shows that from 2017 to 2028, Zambia will demand an increased capacity of between 60 and 1,740 megawatts and electricity of 2,998 and 9,004 GWH.
“Government will source funds for the 15 percent equity financing of the total project. Government has released US$186 million to Zesco as part of its initial equity and investment contribution,” Mr Mundende said.
He said the remainder of the 85 percent debt financing of the total project cost will be borrowed by the Kafue Gorge Limited through export credit from Exim Bank of China and the industrial and commercial banks.
He said the development and construction of Kafue Gorge Lower Station must be fast-tracked, completed and commissioned to meet the increasing energy demand both in Zambia and southern Africa.
Sinohdyro Corporation vice-president Liu Kai pledged to work with Zesco and help provide quality works that will be completed within the stipulated time frame.