The World Bank has approved a $75 million loan to help reorganize the electricity sector in Zambia. The loan will be used to improve efficiency and financial stability through restructuring, policy reform and the construction of additional capacity.
The loan also includes a component to aid the development of the Gwembe Tonga, a people who suffered as a result of the construction of the Kariba dam.
The Zambia Power rehabilitation project is expected to cost $204 million. The World Bank’s credit of $75 million will be boosted with $14 million from the Zambian government. The remainder will be raised from multilateral and bilateral agencies.
The project aims to help private sector involvement in all of Zambia’s major new generation and transmission projects. Private sector investment will be facilitated by further strengthening of the Energy Regulatory Board (ERB).
In a separate move, the ERB has ordered the Zambian national utility Zesco to reduce electricity tariffs by 30 per cent. The reduction is believed to reflect the poor quality of service that Zesco has provided, a quality which the rehabilitation project is targeted to improve.