The Zambian Government and Neoen S.A.S of France, the preferred bidder under the Scaling-Up Solar Project, have completed negotiations on taxation, land provision, and equity financing. The conclusion of the negotiations paved way for signing of a Power Purchase Agreement [PPA] between Neoen S.A.S and Zesco Limited last Friday.
Neoen S.A.S, a leading French Company in renewable energy, will construct a 100 Mega Watt Solar Power Plant from the planned 500 Mega Watts under the Scaling-Up Solar Project.
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 added that “the finalization 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.”
An elated Mutati further stated that “the negotiations have been tough but through joint determination to succeed and inject 100MW in the main grid by end of this year, we have come to a mutually beneficial agreement,” and, he said, “the people will be greatest beneficiaries as it will contribute significantly in mitigating power supply challenges in the country.”
“This milestone is a practical fulfillment of President Edgar Lungu’s directive to diversify sources of power supply and to provide solutions in the short to medium term that will overcome load shedding” Zambia’s Minister of Finance said.
Meanwhile, Mr. Le Guen has described the Neone/IDC deal as the best in the world as it has 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 Lungu launched the first round of the Scaling Solar Project targeting 100MW on 7th May 2016 at the project site in the Lusaka South Multi Economic Zone (LS-MFEZ).
During that 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 development of a 100 MW plant after which Neoen was awarded the tender at a tariff of 6.02¢/kWh, fixed for 25 years. The 100 MW is expected to on the grid in the third quarter of 2017.
The development is being carried out under a special purpose vehicle called Bangweulu Power Company, owned 80 percent by Neoen S.A.S of France and 20 percent by IDC of Zambia. The IDC has now proceeded to issue a call for bids for the balance of 400 MW.
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 Government’s and utilities procure solar power transparently, competitively and at the lowest possible cost.