- July 16, 2024
- Posted by: Alice Mapulanga
- Categories: News, Press Release, Speeches
LADIES AND GENTLEMEN,
ZAMBIA IS CURRENTLY EXPERIENCING ADVERSE DROUGHT WEATHER CONDITIONS THAT HAVE LED TO A HUGE REDUCTION IN THE LEVELS OF WATER IN THE MAJOR RIVERS FROM WHICH ELECTRICITY IS GENERATED, RESULTING IN A POWER DEFICIT OF ABOUT 750MW. THE SITUATION HAS COMPELLED THE MAIN POWER UTILITY COMPANY TO RATION POWER SUPPLY TO THE NATION. THIS HAS ADVERSELY AFFECTED INDUSTRIES AND BUSINESSES, ESPECIALLY THOSE THAT RELY HEAVILY ON POWER. THE HOUSEHOLDS HAVE NOT BEEN SPARED EITHER AS FAMILIES HAVE TO COPE WITH LONG HOURS OF LOADSHEDDING TOO. THIS SITUATION CALLS FOR DRASTIC AND IMMEDIATE ACTION FOR THE COUNTRY TO CONTINUE ON ITS ECONOMIC RECOVERY PATH THAT WE HAVE EMBARKED ON AND FOR HOUSEHOLDS TO RETURN TO THEIR NORMAL LIFESTYLES.
IN VIEW OF THESE CHALLENGES AND THE NECESSITY TO ENSURE A RETURN ON INVESTMENT FOR THE SCHEME’S SUSTAINABILITY, THE NATIONAL PENSION SCHEME AUTHORITY (NAPSA) HAS SIGNED A FINANCING AGREEMENT FOR THE CONSTRUCTION OF THE MAAMBA COLLIERIES POWER PLANT’S PHASE II. THIS REPRESENTS THE AUTHORITY’S SECOND INVESTMENT IN A POWER GENERATION PROJECT, FOLLOWING THE COMPLETION OF THE 750 MW KAFUE GORGE LOWER HYDRO POWER STATION, WHICH REQUIRED AN INVESTMENT OF USD 190 MILLION.
IN RESPONSE TO THE CALL FOR PROPOSALS WE ISSUED IN MID-2023, TO WHICH WE RECEIVED AN OVERWHELMING RESPONSE, WE ARE CURRENTLY EVALUATING A VARIETY OF PROJECTS FOR POTENTIAL INVESTMENT AND FUNDING. THESE PROJECTS FOCUS ON ALTERNATIVE ENERGY SOURCES, WITH A PARTICULAR EMPHASIS ON SOLAR POWER. THIS INITIATIVE FORMS PART OF OUR ONGOING COMMITMENT TO DIVERSIFY OUR INVESTMENT PORTFOLIO AND CONTRIBUTE TO THE REDUCTION OF THE POWER DEFICIT IN THE COUNTRY.
MAAMBA PHASE II PROJECT DETAILS
MAAMBA COLLIERIES LIMITED (MCL) HAS SET OUT TO EXPAND POWER GENERATION FROM THE CURRENT 300 MW TO 600 MW THROUGH THE CONSTRUCTION OF A MODERN, TECHNOLOGICALLY ADVANCED AND ENVIRONMENTALLY FRIENDLY 300 MW POWER PLANT WHICH IS BEING REFERRED TO AS MAAMBA PHASE II.
PROJECT COST AND FINANCING
MAAMBA PHASE II IS ESTIMATED TO COST UP TO USD400 MILLION. THIS WILL BE FINANCED BY DEBT OF ABOUT USD300 MILLION AND EQUITY OF USD100 MILLION.
NAPSA’S INVESTMENT
THE AUTHORITY HAS SIGNED A FINANCING AGREEMENT WITH MAAMBA COLLIERIES LIMITED TO INVEST UP TO USD200 MILLION IN FORM OF DEBT FINANCING TOWARDS THE PROJECT. THE DEBT BALANCE OF USD100 MILLION WILL BE FINANCED BY OTHER LOCAL INVESTORS.
THE NAPSA DEBT IS PRICED AT NINE PERCENT NET OF TAXES FOR A PERIOD OF TEN AND HALF YEARS, INCLUSIVE OF TWO AND HALF YEARS OF MORATORIUM PERIOD ON PRINCIPAL REPAYMENTS.
PROJECT DURATION
MAAMBA PHASE II IS PROJECTED TO BE COMPLETED WITHIN 25 MONTHS FROM DATE OF COMMENCEMENT OF THE PROJECT. THE PROJECT IS SET TO COMMENCE IMMEDIATELY FOLLOWING THE SIGNING OF THE FINANCING AGREEMENT ON 4TH JULY 2024.
PROJECT BENEFITS TO NAPSA AND ITS MEMBERS
• THE AUTHORITY IS PROJECTED TO EARN UP TO USD107.6 MILLION IN INTEREST INCOME FROM THIS PROJECT, WITH INTEREST OF USD33.7 MILLION PROJECTED TO BE RECEIVED DURING THE MORATORIUM PERIOD.
• THE TOTAL AMOUNT OF USD307.57 IN INTEREST AND PRINCIPAL REPAYMENTS IS EXPECTED TO BE RECOVERED OVER THE TENOR OF THE LOAN.
• THE PROJECT IS ANTICIPATED TO CONTRIBUTE SIGNIFICANTLY TO PORTFOLIO DIVERSIFICATION. WITH THE AUTHORITY’S PRIOR INVESTMENT IN THE 750 MW KAFUE GORGE LOWER PROJECT, THE ADDITION OF MAAMBA PHASE II IS EXPECTED TO FURTHER ENHANCE THIS DIVERSIFICATION WITHIN THE AUTHORITY’S GREENFIELD ASSET CLASS. IMPORTANTLY, THESE INVESTMENTS ARE NOT POSITIVELY CORRELATED, THEREBY OFFERING A BALANCED AND DIVERSIFIED PORTFOLIO. THIS STRATEGIC APPROACH UNDERSCORES OUR COMMITMENT TO SUSTAINABLE AND DIVERSIFIED INVESTMENT PRACTICES.
• THE PROJECT WILL HEDGE THE PORTFOLIO FROM LOCAL CURRENCY DEPRECIATION AS WELL AS INFLATION BECAUSE OF IT BEING IN FOREIGN CURRENCY.
• THE MEMBERS WILL BE GUARANTEED OF THEIR BENEFITS BECAUSE OF ASSURED CASHFLOWS FROM THE DIVERSIFIED ASSET PORTFOLIO
• THE AUTHORITY STANDS TO GAIN FROM THE JOB GROWTH SPURRED BY THE PROJECT, WHICH WILL EXPAND ITS MEMBERSHIP BASE AND BOOST COLLECTIONS. THIS WILL BE FURTHER SOLIDIFIED BY HEIGHTENED ACTIVITY IN SECTORS SUCH AS MANUFACTURING AND MINING. PARTICULARLY, THE SURGE IN INDUSTRIAL ACTIVITY IS EXPECTED TO DRIVE PRODUCTIVITY AND WEALTH CREATION. THIS, IN TURN, WILL LEAD TO SUSTAINABLE CONTRIBUTIONS TO THE AUTHORITY, REINFORCING THE FINANCIAL HEALTH AND LONGEVITY OF THE PENSION SCHEME.
PROJECT BENEFITS TO THE COUNTRY
• MAAMBA PHASE II WILL HELP TO DIVERSIFY THE COUNTRY’S ENERGY MIX AND REDUCE DEPENDENCY ON HYDROELECTRICITY WHICH IS BEING ADVERSELY AFFECTED BY CLIMATE CHANGE THAT IS AFFECTING RAINFALL PATTERNS THUS REDUCING THE WATER LEVELS IN THE WATER BODIES.
• THE PROJECT WILL SIGNIFICANTLY REDUCE THE CURRENT LOADSHEDDING AND BRING ABOUT SOME STABILITY IN POWER SUPPLY THEREFORE BRINGING STABILITY IN SOCIAL-ECONOMIC LIFE.
• THE PROJECT WILL SUPPORT THE COUNTRY’S INDUSTRIALIZATION AGENDA, INCLUDING THE ATTAINMENT OF THE TARGETED THREE MILLION METRIC TONS OF COPPER PRODUCTION BY 2030. THIS TARGET IS CURRENTLY BEING THREATENED BY THE PREVAILING POWER DEFICIT.
• THE PROJECT IS PROJECTED TO CREATE ABOUT 1200 JOBS DURING THE CONSTRUCTION PERIOD AND ABOUT 400 DIRECT JOBS DURING THE OPERATIONAL PHASE.
• MAAMBA COLLIERIES HAS PLEDGED TO INCREASE ITS SUPPORT TO A NUMBER OF COMMUNITY INITIATIVES THAT ARE AIMED AT IMPROVING THE LIVES OF CITIZENS AROUND ITS OPERATIONS.
THE NATIONAL PENSION SCHEME AUTHORITY IS DELIGHTED TO BE PART OF THIS LANDMARK SOLUTION TO REDUCE LOADSHEDDING SO THAT WE CAN POWER UP THE MANUFACTURING AND MINING INDUSTRIES THAT ARE KEY DRIVERS OF ECONOMIC GROWTH. THIS WILL ALSO POSITION THE COUNTRY TO BECOME A NET EXPORTER OF POWER TO THE REGION IN THE NEAR FUTURE.
AT NAPSA, WE HAVE IMPLEMENTED ROBUST MEASURES TO SAFEGUARD THE INTERESTS OF OUR MEMBERS AND ENSURE THE SUSTAINABILITY OF THE SCHEME IN THIS TRANSACTION. MOREOVER, OUR COMMITMENT TO FINANCING THIS PROJECT UNDERSCORES OUR UNWAVERING DEDICATION TO DEVELOPMENTAL INITIATIVES. THIS IS A TESTAMENT TO NAPSA’S PROACTIVE STANCE IN DRIVING PROGRESS AND GROWTH.
AS I CLOSE, LET IT BE KNOWN THAT WHEN IT COMES TO FINANCING DEVELOPMENTAL PROJECTS, NAPSA IS NOT JUST A PARTICIPANT, BUT A CATALYST FOR ECONOMIC TRANSFORMATION.
I THANK YOU AND GOD BLESS YOU.
