Zambia’s Debt Casts Shade On 100Mw Solar PV Tender

  • On 9th April 2018, GET FiT Zambia announced the Request for Qualification stage for the 100MW GET FiT Solar PV Tender. 
  • At the same time, Japanese finance giant Nomura has raised questions on the size of Zambia’s public debt.
  • The impending crisis may stall the countries renewable energy program.

After much stakeholder negotiation and planning, GET FiT Zambia recently announce the opening of Round 1 of their renewable energy program. The program is structured as a competitive auction for up to 100 MW of solar PV capacity. The Request for Qualification (RFQ) stage for the 100MW GET FiT Solar PV Tender was launched on Monday, 9 April 2018.

The tender will award a total of 100 MW of solar PV capacity to successful bidders. In line with the Zambian REFiT Strategy, individual projects will have a maximum installed capacity of 20 MW each. Eligible applicants may apply for up to two projects. Provided that minimum requirements as per the  RFO are complied with, a maximum of 20 projects and a corresponding number of bidders will be shortlisted and invited to submit a full technical and financial bid during the current request for proposal stage.

The announcement comes at a time when Nomura, a large Japanese finance house, has raised questions regarding the Zambian governments’ stated debt.  There is widespread speculation that the government has been concealing more than half of their short-term external debt, or miscalculated it.

Speculation of undisclosed loans started in June last year when the former finance minister Mr. Felix reported to parliament that foreign debt stood at US 17.2-billion. He then doubled back on his statement and announced that debt at the time stood at US 7.2-billion. A number of international finance houses have assessed that external debt is currently hovering around $16-billion.

The Zambian government has rubbished the claims thus far. If true the country faces a potential financial and economic crisis and a withdrawal of donor and investors funding.

Investors are reminded of a similar scenario that played out in Mozambique in 2015/16 when US 2-billion in loans were secured by officials and state-owned companies. The loans were not approved by parliament or disclosed publicly. As a result, international donors froze fiscal support and the country was effectively isolated from foreign investment.

Zambia has come a long way in terms of their renewable energy program. The framework is in place and work done by the GET FiT team and their grant funders have brought the country to a point where utility-scale renewable energy rollout is about to be achieved. The current 100Mw Solar Pv tender is the starting point for a much broader rollout which includes hydro and wind projects. It is important that the Zambian government comes clean on their debt statement to ensure ongoing investor confidence in the much-awaited program.

Author: Bryan Groenendaal

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