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.
Zimbabwean President Robert Mugabe on Friday met his Chinese counterpart Hu Jintao, who praised the two nations' "strong and deep friendship" and pledged to boost trade and investment and strengthen political ties. China has been a key international supporter for Mugabe, who is criticised and shunned by the United States and Europe.
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.
Musokotwane said the new company would sign a power purchase agreement with Zesco by April 2011 to facilitate the investments into the plant. He said the new joint venture company would borrow funds on its own without the government being part to the new debt and also operate the new power plant for sometime. Konga separately said the project, expected to create about 2,000 jobs would be completed by mid-2016.