Zambia to borrow $500m to pay Zesco debts


– Digging a pit to fill another pit

The PF regime and ZESCO are planning a $500 million bond programme in part to settle arrears to independent electricity providers, according to one of the companies owed.

The bond programme will be done in two tranches, the first of which could be in the next two months, said G.R.K. Prasad, director at Nava Bharat Ventures Ltd, the Indian company that operates a coal-fired power plant in Zambia. Zesco Ltd, the state-owned electricity supplier that the plant supplies, owes Nava Bharat $169 million, he said on Friday on a call with investors.

Zesco spokeswoman Hazel Zulu didn’t respond to an email and a call seeking comment. Neither did Energy Minister Matthew Nkhuwa when contacted outside normal business hours, nor finance ministry spokesman Chileshe Kandeta.

“We are told that it’s in very advanced stage by the government and the local utility,” Prasad said of the bond programme.

Zambia’s external debt has about almost doubled from $4.8 billion in 2014 to $9.5 billion in September, as the government built hundreds of kilometres of roads, power stations and airports. The country is now at high risk of external debt distress, according to the International Monetary Fund. Yields on its Eurobonds are above 13 per cent, indicating a new bond programme would be pricey.

Nava Bharat owns 65 per cent of the 300 megawatt Maamba power plant in southern Zambia. Africa’s second-biggest copper producer relies on hydropower for almost all of the rest of its supplies.

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