Friday, May 31, 2024

Zesco signs $3.5bn deal with China’s CiEG for renewable energy production in Zambia

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Zesco, Zambia’s state-owned power utility company, has signed a Power Purchase Agreement (PPA) with Integrated Clean Energy Power Company Ltd (CiEG), a subsidiary of China Huadian Corporation, to produce 2,400 Megawatts of renewable energy estimated at US$3.5 billion. This agreement will be rolled out in phases of 600-800MW over a 3-year period in 4 provinces beginning this year with 300mw in Southern Province and 300mw in Central Province.

China Huadian Corporation is a global energy company and the third largest electricity power producer in the world, listed on Fortune 500. CiEG is an investment development and Mergers and Acquisitions (M&A) of international projects arm for China Huadian Corporation.

This sizeable foreign direct investment (FDI) from China into Zambia is a testament to the reset and enhanced relations between the two countries for mutual benefit, which dates back to the two founding fathers; Chairman Mao and Dr. Kenneth Kaunda.

According to a statement released to the media by Clayson Hamasaka, the chief Communications Specialist at State House, the investment pledge of US$3.5 billion follows an earlier investment of US$2.5 billion in 2,000mw of energy by Masdar from the United Arab Emirates. These investments signify the New Dawn’s Government’s strong resolve to achieve energy sufficiency for the domestic economy and energy surplus to enable increased exports as part of promoting export diversification and enhanced foreign currency earnings.

This power project is expected to boost Zambia’s energy capacity, which has been a critical issue in recent years, leading to power outages and supply interruptions in the country. The additional power supply will not only cater to the domestic demand but also enable Zambia to export surplus energy, which will enhance its foreign currency earnings.

The investment by China Huadian Corporation is also expected to create job opportunities for the local population, enhance economic growth, and improve the overall living standards of the people. The project will also contribute to reducing Zambia’s carbon footprint and mitigating the effects of climate change.

The successful completion of this project will be a significant milestone for Zambia, which has been grappling with energy shortages for years. The government’s resolve to attract foreign investment to the energy sector is expected to create a conducive environment for further investment in the sector, leading to enhanced energy security, economic growth, and improved living standards for the people of Zambia.

5 COMMENTS

  1. Instant deal..not one where musungu comes sits and talks then after 5 years they say they won’t invest….

    This is why China means business and as much as we approach USA and the west for Foreign Direct Investment we must never turn out backs on China because they are always first to invest without much talking. They walk the talk.

    Let this deal be transparent and all updates must be shared with the nation. Do not operate in silence please.

  2. Apart from this CiEG, Zambia has several independent power producers like CEC, (Copperbelt), Maamba Collieries (SP), Nangoye Power (Lusaka), etc. All, except Copperbelt Energy who have their own powerline and export directly to DR Congo, sell power to ZESCO.
    Maamba prices its power more expensively than Zesco can sell to end users.That’s why these two firms are always in legal disputes culminating in, by December 2022, the London arbitration that forced Zesco to pay the whooping $518m arrears!

  3. Presently, HH pressed the “factory reset button”, I hope to see wholesome and healthy power deals starting with CiEG and extending to others.
    Create a “common carrier” so that no one, ZESCO or CEC, is monopolising power distributions or exploiting one player.

  4. ZESCO will continue supplying the local market at a loss cause the tariffs in Zambia are very low and unprofitable.
    CiEG, MASDAR, Ultra Green Corporation and other IPP’s will produce power for the export market were the tarrifs are cost reflective and profitable.
    Once the World bank/EU funded Zambia -Tanzania connector is completed by 2025, Zambia will have access to Tanzania which has a power deficit of 600MW with a national tariff of around 10 cents/Kwh (2 times higher than Zambia)

  5. This is potentially the biggest news of the year so far but look so few comments…people are more concerned with Munir Zulu…how can we develop as a nation when people are more concerned with sensational headlines and not developmental issues that concern the economy….cry the beloved nation.

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