The Government announced yesterday that it is seeking $800m for new power projects and plans to borrow up to half of that amount in 2009 to help ease disruptions of electricity supply. Finance Minister Situmbeko Musokotwane has indicated to the IMF that ZESCO and Government would like 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. Any non-concessional borrowing for these projects would not exceed $400 million in 2009".
We have discussed debt and energy on this blog many times. Zambia's current external debt position is hovering around $2.3bn (see the 2008 Economic Report) and many continue voice concern e.g. here and here. For the avoidance of doubt, the problem remains lack of a coherent framework for securing debt that has the support of all Zambians. In this instance, its even more problematic because ZESCO has its own madness. We are borrowing to fund a company that has failed the Zambian people constantly. We have been working on a model for restructuring ZESCO (and ZAMTEL), which deserves much attention. Whether you go with our model or some other way, piling more debt on the backs of our unborn children off the back of an inefficient company is naive, at worst organised insanity.