IDC gets $2 million funding support to scale up solar project

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lumangwe2THE United States government has provided a US$2 million funding to support Zambia’s first round of scaling solar project being implemented by the Industrial Development Corporation (IDC) This demonstrates confidence by the United States in the Zambia Scaling Solar programme.

United States Agency for International Development (USAID) Zambia director Mike Yates said US$2 million had been approved to assist in the implementation of first round scaling solar project.

He said the funding would lower project development costs by covering the success fees payable by developers to the International Finance Corporation (IFC) once the deal reach financial close.

Dr Yates said the United States remains committed to working with the Zambian Government and the people to achieve long-term power sector development that extends beyond the current power crisis and uplifts the standards of living of millions who have never had electricity before.

He said this in Lusaka recently.

“The United States government through Power Africa and USAID Zambia has approved just yesterday US$2 million in funding to support Zambia’s first round of scaling solar,” Dr Yates said.

He said electricity was the lifeblood of any modern economy saying that Zambia’s future economic prospects are closely tied to development of the energy sector.

“This year’s power outages have already cost Zambia dearly in terms of productivity, jobs and social development,” he said.

In Zambia, the United States has partnered with Sweden, the African Development Bank and World Bank under Power Africa to support innovative approaches to increase renewable energy generation and access including for the more than 70 per cent of Zambians who currently have no electric power.

He said harnessing solar power for electricity generation was one of such approach that should be undertaken.

In addition, new technologies have been driving down sharply the costs of solar energy and with over 300 days of sunshine per year, Zambia has great untapped potential.

Dr Yates said the private sector investment was key to realising that potential and the Zambian Government had a vital role to play in that regard by reforming inefficient procurement processes, under priced tariffs and reducing financing risks.

“We applaud the Zambia Government and the IFC for this innovative scaling solar venture. It has created a transparent, competitive bidding process to attract qualified solar power developers, and will offer adequate prices, streamlined procurement processes, and financing support to facilitate financial closure and implementation of solar power production,” Dr Yates said.

IDC chief executive officer Andrew Chipwende explained that the IDC had adopted a structure that would enable Zambian participation in the two solar projects.

“ The structure being adopted is one which will enable Zambian participation through the retention by IDC of a minimum of 20 per cent shareholding in the two companies that are going to own the first two solar projects in Zambia,” Mr Chipwende said.

The IDC initially owns 100 per cent shareholding in these special purpose vehicles which will be reduced with the two winning bidders assuming majority control in each company.

Mr Chipwende said the Government had announced its intention to offer its shares to the public once the companies are profitable.

He said the shares would be offered through an initial public offering on the Lusaka Stock Exchange (LuSE) saying that the Zambian would be given the first right to buy shares that would be owned by IDC in the two companies.

“This is in response by the Government towards the issue of empowering citizens through ownership of high quality enterprises. Secondly contribute towards furthering deepening of the stock market,” Mr Chipwende said.

In July 2015, President Edgar Lungu directed IDC to drive the urgent development and installation of at least 600 mega watts of solar power, in order to rectify the current power deficit in Zambia and resultant national crisis.