Southern African electric project attracts multilaterals
Five investors have expressed interest in financing a project to build an electricity transmission interconnector between Zimbabwe, Zambia, Botswana and Namibia.
The potential lenders include the African Development Bank (AfDB) for up to 40% of the debt requirements, the Development Bank of Southern Africa (DBSA) for US$50mn, the European Investment Bank (EIB), the French Development Agency (AFD) for US$30-50mn, and Stanbic Botswana, a local division of Standard Bank.
The project was presented to them by the Southern African Development Community (SADC) at an investors roundtable held in Swakopmund, Namibia, on July 12, 2012, and the financing arrangements have yet to be formalised, with financial closure expected by December 2013.
The total cost of the interconnector is US$223mn, including US$156mn in debt with a 15-year tenor, and the remaining US$67mn in equity. According to Odala Matupa, programme officer, power at SADC, fundraising is not expected to be a challenge, but the project is taking a long time due to the complexity of the multi-country arrangement.
Lawrence Musaba, co-ordination centre manager at the Southern African Power Pool, adds that other challenges are slowing the process, including the weak balance sheets of the project sponsors, delays in signing key commercial agreements such as wheeling and power purchase agreements, and delays in coming to agreement on the implementing structure.
Upon completion, expected in January 2016, the transmission will 300MW transfer capacity (expandable to 600MW), increasing energy trade between the four countries and easing congestion on the north-south corridor between Zimbabwe and South Africa.