Western Power will employ a Project Finance structure to raise the money required to construct the project.
Project Finance is commonly used to finance large infrastructure projects as it uses the security of a long-term contract – in this case a contract to sell electricity for 25 years – as security to borrow up to 80% of the project cost from a group of lenders.
Lenders are likely to be Development Finance Institutions, which are organisations funded by governments and mandated to support infrastructure projects in the developing world.
Western Power is discussing the terms of a Power Purchase Agreement (PPA) with ZESCO, the Zambian national utility, for the purchase of all the electricity produced by the power station for 25 years.
Total project cost more than $650m
Development spend to date is approximately $13m
Development spend remaining approximately $6m
Construction funded using a Project Finance structure with up to 75% raised as debt from Development Finance Institutions secured against a long-term offtake agreement (25-year PPA with ZESCO).
Financial close targeted
Q4-2024.
The construction costs breakdown as follows:
