China Eximbank provides $315 million loan for 360MW Kariba North Bank Hydropower Plant Expansion Project

In October 2008, China Eximbank and Kariba North Bank Extension Power Corporation Limited (KNBEPCL) — a special purpose vehicle and wholly-owned subsidiary of Zambia Electricity Supply Corporation (ZESCO) Limited, a state-owned power company in Zambia — signed a $315 million loan agreement for the 360MW Kariba North Bank Hydropower Plant Expansion Project. KNBEPCL is a project company and a wholly owned subsidiary of ZESCO Limited, Zambia’s state-owned power company. The China Eximbank loan to KNBEPCL carried the following borrowing terms: a 15 year maturity an interest rate of LIBOR plus 200 basis points. The loan’s amount outstanding was $268 million as of December 31, 2015, $240.9 million as of December 31, 2016, $214.2 million as of December 31, 2017, $214.2 million as of December 31, 2018, $160.62 million as of December 31, 2019, $133.848 million os of December 31, 2020, $120,464,052 as of June 30, 2021, and $100,002,768 (inclusive of $6,308,506 in interest arrears) as of June 30, 2022. The loan was secured by (collateralized against) receivables from Copperbelt Energy Corporation and Chambeshi Mining Company. The proceeds from this loan were used to be used by the borrower to finance an EPC contract between Sinohydro and ZESCO Limited, which was signed on November 15, 2007. Development Bank of South Africa also provided a $105 million loan for the same project. This project involved an expansion of the power generation capacity of the Kariba North hydroelectric power station through the installation of two new generators. Construction began on November 5, 2008. However, the project encountered a number of problems and delays. In 2009, a fire broke out in one of the generators. Then, in November 2011, it was reported that project completion had been delayed a year due to 'financial constraints'. The project was ultimately completed on August 21, 2014. An official completion ceremony took place on August 27, 2014. The 1.08GW Kariba North hydroelectric power station is located on the bank of Zambezi River at Kariba in the southern province of Zambia. It includes the Kariba North Bank (KNB) (720MW) power plant and the Kariba North Bank Extension (KNBE) (360MW) power plant. The KNB power plant was developed between 1969 and 1976 as part of the Central African Power Corporation’s (CAPC) development program. The KNBE power plant consists of two 180MW vertical-shaft Francis turbines with a rated discharge 227.6m3/s operating at a head of 89m for each single unit. It has two intake chambers for water at an elevation of 458m. The underground powerhouse is 24m wide and 51m in length. The power generated is transmitted through a 130 km long, 330kV transmission line from the KNBE power plant to the existing Kafue west substation. The power generated from KNBE is purchased by ZESCO Limited under a 20-year long-term power purchase agreement (PPA), which was approved by Zambia’s Energy Regulation Board (ERB) in April 2011.

Additional details

1. The Chinese project title is 赞比亚卡里巴北岸水电站扩机工程 or 卡里巴北岸电站2X180MW or 在赞比亚卡里巴北岸水电站扩机项目. 2. AidData estimates the all-in interest rate (5.878%) by calculating the average 6-month LIBOR rate in the month when the loan was originally contracted (0.517%) and adding a 2% margin. 3. Some sources suggest the the loan agreement was signed in November 2009 rather than October 2008. This issue warrants further investigation.

Number of official sources

30

Number of total sources

53