CNBC Africa is joined by Emmanuel Chilombo Kalenga: Managing Director, Enterprise Power Zambia for more.
We are discussing the prospects that more power could be on the cards for Zambia as well as the DRC. This follows a deal signed by Enterprise Power DRC with the International Finance Corporation to finance the construction of a 330 kV interconnector between Zambia and the Democratic Republic of Congo. The project is estimated to cost around US$227 million. I'm now joined by Emmanuel Chilombo Kalenga, Managing Director over at Enterprise Power Zambia for more on this. Emmanuel, thanks so much for your time. Perhaps just explain to us, I mean, the significance of this deal and the position that you are at right now just following this deal with the IFC. Thank you. Thank you, Fifi. Thank you for having me. This is a very, very exciting juncture. Our clients are very excited about this signing. Our partners, our stakeholders, including the two host governments, that's the government of the President Hakim De Chilema of Zambia and the government of President Felix Tshisekedi in the DRC. Fifi, just to put it into context, firstly, this project is going to be the first privately developed and financed transmission line, a high voltage transmission line across two countries in sub-Saharan Africa. It's a project that's going to be project financed by our equity investors and by the DFIs. So, coming to the mandate that was signed, this is the role now that the IFC is going to play to structure the debt for the deal by bringing in the other DFIs. In terms of our clients, as you have rightly stated, the DRC has been undergoing a chronic shortfall of energy. What this line represents is the increase of capacity from interconnecting the DRC to Zambia and further to the regional network, which we call the Southern African Power Pool. What that does then is that it guarantees additional energy into the DRC and for our clients, for our mining clients. Sure. I don't really have experience of what the power situation in the DRC is like, but I was recently in Zambia and some of the colleagues I got to interact with on the ground just told me that they were living in a situation as a result of the drought, of course, that impacted the power situation in that country. But they were in a situation whereby they were living on three hours of power every three days, essentially. So it sounds like it's significant for Zambia as well. But Emmanuel, just talk to us about what next steps are right now. The paperwork is done and you did mention that the IFC, as well as yourselves, are talking to other potential DFIs who will help fund the total project. But what next and just feasible project timelines, as it were, for completion of this project? Right. So, Fifi, the next milestone that we're looking forward to is to reach our financial clause. This is going to be dependent on the process that the IFC has started, which is bringing in the other DFIs. We are targeting financial clause mid-2025. With achieving that financial clause, we're looking at a build of about 30 months to complete or to bring the project to commercial operation. Now, it's also important to mention, Fifi, as you noted, that Zambia is currently undergoing an energy supply shortage. Now, yes, without putting things into context, it might appear that a project like this might be a threat to that. In fact, it is one of the key solutions that we have presented. What this project represents is that we, as Enterprise Power, are a private power trading company. We have the ability to offtake power from all developers. And as we speak, we're currently speaking to a number of developers in Zambia who have had their projects not taking off for lack of funding. But because Enterprise Power is coming in to offer these offtake agreements, some of these projects should start taking off. And with that, we expect that this should help alleviate the supply shortage in Zambia. At the same time, taking the power to the DRC is an upside because this is now going to open up the regional transfer capacity. Now, one of the things we have experienced recently in South Africa and currently in Zambia is that when a country is suffering from a supply shortage, there's also opportunity, there's obviously opportunity to bring power into the country from the neighbouring countries. And this is what an interconnector such as this one represents. So if your supply shortage is down, you're able to go to other countries, buy power from those countries and transmit that power into your country. So the IFC is on point in investing in a transmission line like ours that should bring in that capacity. Of course. And I mean, projects of this nature scale and capacity are naturally not without its risks. And perhaps maybe the presence of the likes of the IFC and other partners could help mitigate some of those challenges. But what are some of the headwinds that you potentially see for infrastructure related projects of this scale? Obviously, geopolitical risk is one of them. It's important that, for example, in this particular case, one of the mitigants that we was putting right from the beginning, we started the development of the project was an intergovernmental memorandum of understanding between the governments of Zambia and the governments of DRC to cooperate in projects like this. So obviously, you want to cover that. You want to ensure that on both sides of the asset, as in our case, your stakeholders, the people, your communities where you're operating, are happy to implement and support a project like this. The governments are happy to implement and support projects like this. Yes, I think that's one of the key aspects. And I suppose that it goes without saying, Manuel, that in the event that this project is successful, that the next steps would be seeing whether there is potential to build other such interconnected transmission lines within the region. Yes, I mean, as I mentioned, this will be a first of its kind. If you look at where Zambia is positioned, and I mentioned this being an exciting moment because what has happened in Zambia is the government of Zambia has actually introduced two very exciting mandates. One of them is called Open Access, under which this line is going to operate. What Open Access means is that it's not only enterprise power that's going to transmit the electrons across the border. Other parties are also welcome to do it, to transmit the power by agreeing a willing agreement with enterprise power. So that talks to the Open Access that the Zambian government has introduced. The second aspect to this is, obviously, with a crisis that's hitting the region, what you see is that a lot of initiatives in terms of self-generation, be it by solar, by wind or off-grid generation is happening. It's going to be important in the near future to ensure that all these generations is actually interconnected into the grid. So that talks to one of the mandates that the Zambian government has implemented, which is called net metering. So with net metering, we're able to absorb, so as a power trader, we're able to absorb this power, off-take it and take it to where it's needed. All right. Well, do certainly keep us posted with the development of this project. As you said, quite the game changer for the region. But we'll leave it there for now. So thanks so much for your time. Emmanuel Chilombo Kalenga, Managing Director for Enterprise Power Zambia.
Theme: Transformative Potential of Zambia-DRC Interconnector Project
Enterprise Power DRC has recently inked a deal with the International Finance Corporation (IFC) to finance the construction of a 330 kV interconnector between Zambia and the Democratic Republic of Congo (DRC). This monumental project is estimated to cost around US$227 million and marks a significant milestone in the energy landscape of both countries. Emmanuel Chilombo Kalenga, the Managing Director of Enterprise Power Zambia, shed light on the importance of this deal and the transformative potential it holds for the region. Kalenga highlighted the historic nature of the project, stating that it will be the first privately developed and financed transmission line of its kind in sub-Saharan Africa. The collaboration between equity investors, development finance institutions (DFIs), and the IFC underscores the innovative financing structure underpinning the initiative. By interconnecting the DRC to Zambia and integrating them into the Southern African Power Pool, the project promises to bolster energy capacity and bolster supply in both countries. The DRC has long grappled with energy shortages, while Zambia faces challenges exacerbated by factors like drought. Kalenga emphasized that the interconnector represents a lifeline for both nations, offering a pathway to increased energy access and stability. The project timeline envisions a mid-2025 financial close, with a subsequent 30-month construction period towards commercial operation. Beyond addressing immediate energy deficits, the interconnector aligns with broader regional strategies for power sharing and grid optimization. By facilitating cross-border electricity trade, the project not only enhances energy security but also lays the groundwork for future interconnected transmission lines within the region. While the project holds immense promise, Kalenga acknowledged the inherent risks associated with infrastructure ventures of this scale. Geopolitical dynamics and stakeholder cooperation are critical factors that require diligent management to ensure the project's success. The presence of strategic partners like the IFC serves to mitigate these challenges and provide a solid foundation for sustainable project execution. Looking ahead, Kalenga expressed optimism about the potential for additional interconnected transmission lines in the region. He highlighted key governmental mandates in Zambia, such as Open Access and net metering, which signal a commitment to fostering a dynamic and inclusive energy ecosystem. These initiatives underscore Zambia's position as a trailblazer in embracing innovative energy policies and paving the way for future energy infrastructure developments. As the project progresses, Enterprise Power Zambia remains committed to driving positive change and catalyzing energy transformation in the region. The interconnector project stands as a testament to the power of collaboration, innovation, and shared vision in advancing sustainable energy solutions.
"The interconnector project stands as a testament to the power of collaboration, innovation, and shared vision in advancing sustainable energy solutions."
Enterprise Power, Zambia, DRC, IFC, energy, transmission line, sub-Saharan Africa, Southern African Power Pool, infrastructure, electricity trade