NAPSA/Maamba Collieries Partnership: A win for Zambia’s energy sector.

It is undeniable that the world needs to take quick action to put brakes on the escalating global energy crisis. But the current energy crisis impacting the Zambian economy is an immediate priority that requires a quick domestic solution. The problems arising from a shortage of energy threaten to crowd out government’s efforts to mitigate the current economic social challenges.
In complementing government’s effort as well as aligning itself with existing policies in addressing anergy challenges, the National Pension Scheme Authority (NAPSA) has expanded its investment portfolio with a mission to finance areas that boost Zambia’s economy and sustain the livelihood of people. This is being actualized through financing of energy projects in the country. The recent agreement is with Maamba Collieries Limited for the construction of the second 300 MW powerplant, also known as Maamba Phase II.
This initiative aims to mitigate the severe power deficit caused by prolonged drought conditions affecting the country’s hydroelectric generation capacity and to diversify the county’s energy mix.
For a long time now, Zambia has largely relied on hydropower as a source of energy. However, the recent drought and worsening climatic conditions have demonstrated that high reliance on hydropower might be counterproductive. This means that alternatives such as NAPSA’s investment in Maamba, will go a long way in mitigating the power crisis and diversifying the country’s energy mix.
“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,” explained Shipango Muteto, Chairperson of the NAPSA Board of Trustees.
“This situation has compelled the main power utility company to ration power supply to the nation, adversely affecting industries, businesses, and households.”
The new power plant, estimated to cost USD 400 million, will be financed through a combination of US$ 300 million in debt and US$ 100 million in equity.
Of this total, NAPSA’s contribution will be US$ 200 million in debt financing, priced at nine percent net of taxes over a period of ten and a half years, inclusive of a two-and-a-half-year moratorium on principal repayments.
“The National Pension Scheme Authority is delighted to be part of this landmark solution to reduce load-shedding so that we can power up the manufacturing and mining industries that are key drivers of economic growth,” Muteto said.
The Board Chairperson emphasized that the project will also support Zambia’s industrialization agenda, including the targeted production of three million metric tons of copper by 2030.
The Maamba Phase II project is projected to be completed within 25 months from the commencement date.
Upon completion, it will expand Maamba Collieries’ power generation capacity from 300 MW to 600 MW, utilizing advanced and environmentally friendly technology, Muteto disclosed.
“This project will significantly reduce the current load-shedding and bring about stability in power supply, therefore stabilizing socio-economic life,” Muteto noted. “
Once completed and operational, the project will help diversify the country’s energy mix and reduce dependency on hydroelectricity, which is being adversely affected by climate change.”
For NAPSA and its members, the financial benefits are substantial.
The Authority is projected to earn up to US$ 107.6 million in interest income from this project, with interest of US$ 33.7 million expected during the moratorium period.
The total amount of US$ 307.57 million in interest and principal repayments is anticipated over the loan’s tenure.
Through diversification of its greenfield asset class, NAPSA has also invested in the 750 MW Kafue Gorge Lower project.
Furthermore, the project is expected to create approximately 1,200 jobs during the construction phase and around 400 direct jobs during the operational phase.
“This will expand our membership base and boost collections,” Muteto said, adding that the increased industrial activity will drive productivity and wealth creation, leading to sustainable contributions to the pension scheme.
This investment also underscores NAPSA’s commitment to developmental initiatives and sustainable investment practices.