Zambia receives power investment boost
New investment in Zambia’s energy sector will help fund generation and transmission projects in the country and open up network and trading opportunities across southern and eastern Africa
Bordering eight countries and sitting within the Southern African Power Pool, with growing links to East and Central Africa, Zambia is positioned as a natural hub for regional power trade.
It follows a US$250mn financing deal between Swiss energy and commodities group Mercuria with Africa-focused investor Exergy.
Specifically, the funds will help to finance generation and transmission projects by two Exergy subsidiaries: Lunzua Power Company and Lusitu Transmission and Distribution Company.
• US$250mn investment will boost Zambia’s power infrastructure
• Projects will strengthen regional electricity trade
• Investment supports Zambia’s 10,000 MW power target by 2031
Exergy operates in the power sector through three subsidiaries: Lunzua Power in generation, Lusitu Transmission and Distribution in transmission, and Kanona in trading, balancing surplus and deficit positions.
It trades in the southern African power market and is developing a pipeline of infrastructure projects, including a transmission highway linking Zambia to the East African power market.
“Through its subsidiaries, its pipeline will contribute to Zambia’s target of 10,000 MW of supply by 2031, a central pillar of the Grow Zambia agenda, and to the reliable supply needed by mining, agriculture, manufacturing, tourism, and industry,” an Exergy statement noted.
“Regionally, its trading and cross-border ambitions support Mission 300, the World Bank and African Development Bank initiative to connect 300 million Africans to electricity by 2030.”
The financing agreement, signed in Lusaka and subject to regulatory approvals, marks one of the largest private capital commitments to Zambia’s energy sector, as well as Mercuria’s entry into the region’s power market.
Zambia confidence
According to Exergy, the deal signals confidence in Zambia, in the region, and in the ability of global partners to finance African energy at scale on commercial terms.
The company also added that Mercuria brings more than capital: as one of the world’s largest energy traders, active in over 50 countries, it offers a global view of energy and commodity markets, and of how power, metals and trade connect.
According to Mercuria, Zambia’s stability, growth plan and regional position underpinned its decision to commit long-term capital.
The company “is pleased to play its part in resolving the power infrastructure bottlenecks that have traditionally hindered Africa’s growth,” a Mercuria statement read.
“In doing so, it sought power industry expertise, a disciplined team and an execution-ready project pipeline, and found all three in Exergy—a scalable regional platform it wants to help build.”
Zambia has seen a wave of new investment and projects in renewable energy in recent years, in addition to traditional hydro and thermal capacity (First Quantum diversifies Zambia energy supply).
Private capital
Mercuria added that it sees private capital playing a critical role in developing strategic energy infrastructure, alongside the traditional development finance model.
Both parties credited Zambia’s power sector reforms, including open access in the electricity market, with enabling independent companies to build and grow.
As well as investment in renewables, the country continues to develop traditional energy sources, such as hydro (Anzana Electric nets US20mn for small hydropower) (Globeleq completes Lunsemfwa hydro acquisition).