Sinohydro provides $10 million USD supplier's credit to ZESCO Ltd. for Musonda Falls Hydroelectric Power Plant Upgrading Project (Linked to Record ID#57560, #66848)

Project narrative

According to the ZESCO 2016 Integrated Report (p. 86), on September 17, 2015, Sinohydro Corporation Ltd. and ZESCO Ltd. signed a $10 million USD bridge loan facility for the Musonda Falls Hydroelectric Power Plant Upgrading Project. This supplier's credit loan carried a 7% interest rate. The maturity was from the date when the loan agreement came into effect (September 17, 2015) until the date when funds became available to ZESCO Limited from a financial institution. ZESCO obtained financing from ICBC on January 26, 2017 (Record ID#57560). Principal and interest was repaid immediately after ZESCO and ICBC signed the loan agreement. Therefore, the Sinohydro supplier's credit loan maturity was approximately 16 months or 1.33 years. This loan was fully drawn down and then fully repaid on August 11, 2017. The Musonda Falls Hydroelectric Power Plant is located in Musonda Falls within Mwense District and Luapula Province. It is a source of power supply to seven districts in the province—namely, Chiengi, Kawambwa, Mwense, Chipili, Chembe, Nchelenge and Samfya. The purpose of this project was to upgrade the Musonda Falls Hydroelectric Power Plant from 5MW to 10MW. This increase in local power capacity also added to the national grid capacity, thereby supporting the fishing industry, farming activities and potential mining activities in nearby communities. In 2015, Sinohydro won the 18-month contract for project implementation. Sinohydro provided another bridging loan in 2016 (see Record ID#66848) for the same project. As of 2017, this project had achieved a 99% completion rate. Turbine-Generator Units 6 and 7 had completed their commissioning tests and reliability runs, but commissioning tests and reliability runs for Turbine-Generator Units 1 to 5 were still ongoing by the end of 2017. The scheduled project handover date of November 18, 2017 was not achieved. However, a 2018 Energy Sector Report published by Zambia’s Energy Regulation Board (ERG) indicates that ‘[t]he increase in [power] generation in 2018 is attributed to the [upgrading] of Musonda Falls Power Station’, which suggests that this hydroelectric power plant project was completed and put into operation in 2018.