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Govt approves power generation ‘investment vehicle’

ENERGY minister Matthew Nkhuwa says there is need to plan for the future and ensure security of power supply to critical socio-economic sectors as well as resolve investment challenges in power generation.

The government has approved the introduction of a Creditworthy Renewable Energy Intermediary Power Off-taker that will sit between Zesco Limited and Independent Power Producers (IPPs).

Nkhuwa stated that the introduction of the Creditworthy Intermediary Off-taker would attract a significant amount of funding required for the sector’s diversification and ensure the successful completion of a significant number of renewable energy projects already in the pipeline.

He that the Creditworthy Intermediary Off-taker was premised on resolving creditworthiness of power off-takers from renewable energy IPPs.

“In addition, the Intermediary Off-taker will not own or operate any grid infrastructure or seek to replace exiting utilities, but will rather complement them and facilitate the optimisation of the power sector from the operational, financial, and commercial perspective resulting in a reduction of costs of energy, diversification of energy resources and increase in the supply of cheaper electricity,” Nkhuwa stated. “The creditworthiness entails building a capital buffer that holds Independent Power Producers for a period of up to 15 months and guarantees payment to commercial lenders by IPPs. It is hoped that this will reduce project risk profile, cost and output tariff. In this regard, cheaper power will therefore be available.”

He noted that 84 per cent of the country’s electricity generation was from large hydro which is susceptible to the effects of climate change, particularly low rainfall patterns.

“In view of the foregoing and bearing in mind the climate change that has negatively affected our power generation, we need to plan for the future and ensure security of supply to critical socio-economic sectors as well as resolve investment challenges in power generation,” stated Nkhuwa.

“The government will continue to look for other viable means to generate sufficient power, supporting our vision of becoming a regional power hub which is one of the key catalysts to national development as advocated in the Seventh National Development Plan (7NDP).”

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