20100813
reuters

LUSAKA (Reuters) - Zambia, Africa's largest copper producer, signed an agreement on Friday with two Chinese companies to build a 600 megawatts plant expected to cost $1.5 billion, Finance Minister Situmbeko Musokotwane said.

Musokotwane said the construction of the Kafue Gorge Lower power project in southern Zambia, would start around April next year, with initial financing of $1 billion expected to come from the Chinese.

Regular power outages, partly due to ageing equipment, in the southern African country, which has had no major investments to raise power generation capacity for decades, has previously forced it to import power from the Democratic Republic of Congo (DRC) to keep the mines running.

Copper mining is Zambia's economic lifeline.

Musokotwane said a new joint venture company, to be formed by state power utility Zesco and China's Sino-Hydro Company and the China Africa Development Fund, will borrow the initial funding of $1 billion from China to start the project.

"This project will also get contribution from the equity partners to get to the full project cost of $1.5 billion," he told journalists.

BUILD, OPERATE AND TRANSFER

Musokotwane said the new company would sign a power purchase agreement with Zesco by April 2011 to facilitate the investments into the plant.