6 March 2017

Zambia: Govt Completes Solar Power Deal

Photo: Premium Times
(File photo).

THE Zambian Government and a France-based firm, Neoen S.A.S, the preferred bidder under the Scaling-Up Solar Project, have completed negotiations on taxation, land provision and equity financing.

Neoen S.A.S, a leading French company in renewable energy, will construct a 100-Mega Watt (MW) solar power plant from the planned 500MW under the Scaling-Up Solar Project.

The conclusion of the negotiations paved way for the signing of a Power Purchase Agreement (PPA) between Neoen S.A.S and Zesco Limited last Friday.

This is according to a statement issued in Lusaka yesterday by Ministry of Finance media and public relations head, Chileshe Kandeta.

Speaking during a bilateral meeting with the French Minister for Development Jean-Marie Le Guen in Lusaka, Finance Minister Felix Mutati said, "this is a great development in our resolution of the

power supply challenges," and that, "the finalisation of the PPA sets solid ground for reaching financial closure on the project that is now expected to be achieved by the end April 2017."

The minister said negotiations had been tough, but through joint determination to succeed and inject 100MW in the main grid by the end of this year, they had come to a mutually beneficial agreement.

"The people will be the greatest beneficiaries as it will contribute significantly to mitigating power supply challenges in the country," he said.

Meanwhile, Mr Le Guen described the Neone/IDC deal as the best in the world as it had attracted a lot of interest in France, wider Europe and the rest of the developed international community.

Mr Le Guen pledged the support of France in constructing the Batoka Gorge.

President Edgar Lungu launched the first round of the Scaling Solar Project targeting 100MW on May 7, 2016 at the project site in the Lusaka South Multi-Facility Economic Zone.

During the event, the President had directed that development of up to 500MW of solar power sources be actualised in the immediate term.

Following that directive, the Government floated a competitive tender for the development of a 100MW plant after which Neoen was awarded the tender at a tariff of 6.02¢/kWh, fixed for 25 years. The 100MW was expected to be on the grid in the third quarter of 2017.

The development was being carried out under a special purpose vehicle called Bangweulu Power Company, owned 80 per cent by Neoen S.A.S of France and 20 per cent by IDC of Zambia. The IDC has now proceeded to issue a call for bids for the balance of 400MW.

Zambia under the World Bank Group's Scaling Solar Project embarked on an open, competitive and transparent procurement process for the rapid development of privately-owned, utility scale solar PV projects in sub-Saharan Africa.

Through the Scaling Solar Initiative, the International Finance Corporation [IFC] offers a one-stop shop solution and package of advisory services, template contracts, financing, guarantees and insurance, drawn from across the World Bank Group to help the Government and utilities procure solar power transparently, competitively and at the lowest possible cost.

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