China Eximbank provides $127.5 million preferential buyer's credit for Phase I of Lusaka-Kafue Bulk Water Supply Project (Linked to Record ID#98552)

Project narrative

In May 2016, China Eximbank and the Government of Zambia signed a $127.5 million preferential buyer's credit (PBC) agreement for the Phase I of Lusaka-Kafue Bulk Water Supply Project. The borrowing terms of the PBC are unknown. However, it is known that the borrower was expected to use the proceeds from the PBC to finance 85% of a $150 million commercial contract between Lusaka Water and Sewerage Company (LWSC) and China Civil Engineering Construction Corporation (CCECC) Zambia Limited, which was signed in January 2013. The Government of Zambia agreed to directly finance the remaining 15% ($22.5 million) of the commercial contract cost. The project involved the construction of a new raw water abstraction station on the Kafue River, a water treatment plant, a 66 km treated water pipeline from Kafue to Lusaka, and a booster station in Chilanga and transmission lines to deliver a total of 50,000m3/day of water into the existing Stuart Park storage facilities in Lusaka. The ultimate objective of the project was to improve water supply to Lusaka and surrounding areas. Upon completion, the project was expected to benefit 480,000 people in Lusaka and surrounding areas. China Civil Engineering Construction Corporation (CCECC) Zambia Limited was the EPC contractor responsible for project implementation. Its work was overseen by Lusaka Water and Sewerage Company (LWSC). A formal groundbreaking ceremony took place on July 20, 2016. However, construction did not begin until September 5, 2016. It was originally anticipated that the project would be completed by November 2018. However, this did not occur due to delays in the delivery of water distribution pipelines. The scope of the project was also revised during implementation to include additional works involving the construction of the Iolanda intake structure (at the Iolanda water treatment plant) and the installation of the Chilanga Booster Pump to meet the power requirements of the project. On September 17, 2020, the President of Zambia visited the project site and affirmed the construction quality and progress of the project. As of December 2020, the project had achieved a 96% completion rate. On July 29, 2022, a project completion ceremony took place. At the ceremony, Zambian president Hakainde Hichilema said that the completion of the project would ensure that about 500,000 people in the Zambian capital have access to clean and safe water as well as proper sanitation. Eric Ding, the general manager of the CCECC Zambia, thanked the Zambian government and the local people for their support during the construction period. He, however, said more financing will be required to undertake the second phase of the project to increase the water supply to the Zambian capital due to the increased population which requires more water. 1,000 local residents were reportedly employed and trained at the peak of the construction phase of the project. China Eximbank and Zambia’s Ministry of Water Development, Sanitation, and Environmental Protection also signed a $79,982,494.00 term loan facility agreement for the Kafue Bulk Water Supply Power Substations Project circa 2019 (see linked Record ID#98552). The borrowing terms of the loan are unknown. The purpose of the project is to construct electricity substations (transformers) and additional works to support the newly constructed facilities at the Kafue Bulk Water Supply Project. The electricity substations were originally scheduled for installation by February 2020. However, they were not delivered on time for unspecified reasons.