RELIEF FOR ZESCO AS GOVERNMENT, INDIA EXIM BANK REACH DEBT RESTRUCTURING AGREEMENT
Zambia has achieved another significant milestone in its on-going debt restructuring efforts under the G20 Common Framework following the signing of the bilateral agreement to structure the debt between the Government of Zambia, ZESCO Limited and Export-Import Bank of India.
The latest development will lead to the restructuring of USD320 Million and USD15 Million owed to Export-Import Bank of India by the Zambian government and the national power utility. Speaking at the signing ceremony held on Wednesday, 7 May 2025 at the Ministry of Finance in Lusaka, Finance Minister, Situmbeko Musokotwane said: “The USD320 Million debt of the Central Government that is being restructured includes and the biggest amount that we have heard is the Lusaka Decongestion Project. So, the flyover bridges that you see and 70/70 [road], all those were financed from this facility and of course the rural health posts that are scattered all over the country. They were also financed from this then of course also the ZESCO support that we have just heard is also part of what we are restructuring.”
Dr. Musokotwane expects the Zambia-Exim Bank of India debt restructuring agreement to reduce the overall debt burden on the country.
“The effects of the restructuring are basically two. The first is to stretch the period of repayment. And, of course, when you stretch the period of payment it means that what you will be paying on annual basis will be smaller because you will be paying over a longer period of time.”
“The other aspect is that the interest rate has been lowered to concessional terms. So, the two aspects - stretching and lowering interest rates - are what gives Zambia relief in terms of the effects of debt restructuring. So, what we will be expending on annual basis as a result of those two things will now be lower,” he added.
Meanwhile, ZESCO Limited Managing Director Eng. Justin Loongo disclosed that the USD 15 Million facility given to the national power utility was for the development of the 120MW Itezhi-Tezhi hydropower station. “The Itezhi-Tezhi Power Corporation is a joint venture between ZESCO and Tata Power of India. At the time of developing this facility, we needed 70 percent debt and 30 percent equity. So, this facility was used on the equity component for ZESCO, and it was further used in the procurement of electromechanical equipment. Hence, accelerating the implementation of the project in Itezhi-Tezhi. Without this facility, I am sure we would have taken long in commencing the works on the Itezhi-Tezhi power project because then we had to go through the financing processes for the debt component of about 70 percent.”