- Nation is suffering severe power deficit due to record drought
- Financing new coal power has become increasingly difficult
Zambia’s energy regulator approved the construction of the nation’s second coal-fired power plant, as its worst drought in decades cut output at the hydroelectric dams that account for most of its energy supply.
The Energy Regulation Board awarded a construction permit for the 300 megawatt facility in the south of the nation, doubling the capacity of an existing plant at the site, it said in a statement Monday. Maamba Collieries Ltd., majority owned by Hyderabad, India-based Nava Ltd. will lead the project.
Zambia relies on hydroelectric turbines to generate about 85% of its power. The heavy dependence frequently brings severe shortages when water levels drop during droughts. The El-Nino induced dry spell — the worst in at least four decades — has prompted rolling power cuts lasting a minimum of 12 hours daily forcing the government to slash its 2024 economic growth forecast to 2.3%.
Read: Zambia Gets $570 Million From IMF as Drought Takes Toll
Zambia signed an implementation agreement with Maamba at the end of June and the company is nearing financial close for the project, Energy Minister Peter Kapala said on state television June 30. Zambia’s national pension fund is evaluating a proposal to provide financing for part of the estimated $400 million project, the company said in an emailed response to questions June 14.
Nava last month declined to comment on the plans.
Financing new coal power has become increasingly difficult as many banks, including Chinese state-owned lenders, have stopped lending for projects that burn the dirtiest fossil fuel.
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