Energy users across Zambia and Southern Africa will benefit from a new 120 MW hydropower plant and long-distance transmission line to be financed with support from Europe’s long-term lending institution. The European Investment Bank will provide EUR 50m for the project that includes the construction of a hydropower plant at the existing Itezhi-Tezhi Dam and 291km transmission line to Lusaka that will connect the power station to the national grid and the Southern African Power Pool.

The funding agreement finalising European Investment Bank support for the ZESCO project was formally signed in Lusaka by Zambian Minister of Finance, Alexander Chikwanda, Managing Director of ZESCO Cyprian Chitundu and representatives of the European Investment Bank.

“Increased production of green energy will lower the cost of importing electricity to Zambia and reduce reliance on coal-generated power. The European Investment Bank recognises the detrimental economic impact of power shortages in the region and is committed to supporting long-term investment in key energy infrastructure across Africa. The impressive Itezhi-Tezhi project complements the European Investment Bank’s support for upgrading the Kafue Livingstone transmission line provided earlier this year.” said Pim van Ballekom, European Investment Bank Vice President responsible for lending in sub-Saharan Africa.

“The Itezhi-Tezhi Hydropower Project will enhance the generation capacity of electricity on the national grid, as well as increasing the reliability and quality of supply of electricity in Zambia.  The 120 Megawatt Project is being developed by Itezhi-Tezhi Power Corporation, with ZESCO and TATA each having a 50% share. Power from the Itezhi-Tezhi Power Station will be transmitted through the Itezhi Tezhi –Mumbwa-Lusaka West transmission line to the national grid. Evacuation of power through this line will significantly reduce the challenges facing ZESCO and help to meeting enormous demand for power arising from expansion of the customer base and growth in mining, agriculture, commercial and domestic sectors”. said Cyprian Chitundu, Managing Director of ZESCO.

“Support for energy is a key focus of European engagement in Zambia. Investment to improve energy infrastructure and increase supply is essential for economic growth, job creation and reducing poverty. The EU Delegation in Lusaka is committed to increasing its contribution to improving energy access as outlined by the next European Development Fund EDF and working closely with the European Investment Bank to ensure effective support for the sector” said Gilles Hervio, Ambassador of the European Union to Zambia.

The Itezhi-Tezhi hydropower project uses an existing dam on the Kafue river, which will minimize the cost of the project and limit environmental impacts. This was constructed in the early 1970s to regulate water flow for the Kafue Gorge Power Station further downstream.

This is one of a number of projects intended to increase hydropower generation for the regional electricity network, the Southern African Power Pool, improve energy connections between countries in the region, reduce Zambia’s power deficit and reliance on imported electricity from coal-based power stations. Electricity generation by ZESCO in Zambia is almost entirely based on hydropower plants on the Zambezi and Kafue rivers. 

Additional financing for the USD 375m project will also be provided by the French Development Agency (AFD), African Development Bank, FMO, PROPARCO, Development Bank of Southern Africa, Republic of Zambia, TATA and the Government of India. An interest rate subsidy and technical assistance grant will also be provided by the EU-Africa Infrastructure Trust Fund. The project is expected to be completed by 2015, provide significant employment during construction and create 60 permanent jobs when complete.