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Power and Infrastructure Finance in Zambia: A Plain Guide

In Zambia, state-owned ZESCO is the main utility and buyer of power, and the Energy Regulation Board (ERB) licenses generators and sets tariffs. The 2024 drought cut hydro output sharply, so new solar and other non-hydro power, often sold to mines, is a major focus for investors and lenders.

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How is the power sector in Zambia set up?

ZESCO generates, transmits, and distributes most of Zambia's electricity. The Energy Regulation Board (ERB) licenses power producers and approves tariffs.

Zambia relies heavily on hydro power. The IMF reported that the Kariba dam, which supplies about 80% of national electricity in good times, generated less than 10% of normal output during the 2024 drought, leading to long daily power cuts.

Copper mining is the largest user of power and the main source of export earnings.

Key projects and programmes

These are public, well-documented examples from the sources below. They show how the market works.

  • Kariba North Bank and Kafue Gorge hydro power stations, including Kafue Gorge Lower (750 MW).
  • Solar IPPs selling to ZESCO or directly to mines, which grew in importance after the 2024 drought.
  • The Lobito Corridor and the planned rail link to Zambia's Copperbelt, which aim to move copper to Angola's Atlantic coast.

How are projects financed?

Power projects in Zambia combine sponsor equity with loans from DFIs and banks. A PPA with a mine or another strong buyer can be easier to finance than one with ZESCO alone, depending on the buyer's credit.

Zambia defaulted on its external debt in 2020 and has been restructuring it. The Eurobond exchange settled in June 2024. Investors should check the current state of the restructuring and the IMF programme.

What should investors, lenders, and off-takers check?

Common checks include:

  • The off-taker's credit: ZESCO, a mine, or another large user.
  • Hydrology risk and how it affects supply, tariffs, and the off-taker's finances.
  • Currency of payment, since the kwacha can move sharply.
  • ERB licences, grid access, and wheeling terms for sales to mines.
  • The state of public debt and any arrears owed to IPPs.

Where does Vektron Merchants fit?

This guide is public information about Zambia. Vektron Merchants does not look for deals there. Vektron Merchants is a marketing agency for energy, commodities, infrastructure financing and industrial firms. We find buyers, offtakers, lenders and partners for companies in these four industries, and we secure meetings with the people who sign.

Frequently asked questions

Why did Zambia have power cuts in 2024?

A severe drought cut water levels at Kariba and other hydro dams. The IMF reported that Kariba generated less than 10% of normal output.

Can IPPs in Zambia sell power directly to mines?

Yes, subject to licences from the Energy Regulation Board and grid access terms. Many recent solar projects are aimed at mining buyers.

Sources

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General information, not investment, legal or tax advice. Facts are from the public sources listed and may change.