June 23, 2009 / 11:54 AM / 10 years ago

Zambia seeks $800 mln for emergency power projects

* Tells IMF it will borrow half the amount this year

* Blackouts disrupt economic lifeblood copper industry

LUSAKA, June 23 (Reuters) - Zambia said on Tuesday it now requires $800 million for new power projects and plans to borrow up to half of that amount in 2009 to help ease disruptions of electricity supply in Africa’s top copper producer.

Power blackouts in the southern African country have in the last two weeks forced copper mines, the country’s economic lifeblood, to trim output while production in other industries is also paralysed, threatening economic growth.

State-run utility, Zesco Ltd., said in February it needed $600 million in emergency loans from lenders in Japan, India and some western countries to boost power supply, but that amount has now been reviewed upward.

In a letter of intent to the International Monetary Fund, Finance Minister Situmbeko Musokotwane said Zesco Ltd. and the government would borrow up to $400 million externally to finance new power projects.

“Given the importance of raising power supply to achieve... growth objectives, as well as limited availability of grants and concessional loans, the government and Zesco may need to contract new external non-concessional borrowing,” he said.

“Any non-concessional borrowing for these projects would not exceed $400 million in 2009,” he said.

Musokotwane said electricity supply from power plants commissioned in the 1970s was way short of demand with gross domestic product growth averaging 5 percent in recent years.

Zesco Ltd.’s Acting Managing Director Musonda Chibulu was quoted by local media saying the utility required $800 million for new projects and rehabilitation of existing infrastructure.

Zambia uses the bulk of its electricity to power its copper mines and has in recent weeks suffered disruptions in copper output and had to import electricity after a fire at a key transformer. [ID:nLH188575]

Zesco says demand for electricity is around 1,450 megawatts and 1,600 MW while it is anticipated to rise to 2,500 MW within the next five years. (Reporting By Shapi Shacinda; editing by James Jukwey)

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