EXERGY and Mercuria, have signed a US$250 million financing deal in Lusaka, marking one of the largest private capital commitments to Zambia’s power sector and Mercuria’s entry into the region’s power market.
In a statement, Exergy said the funds will finance generation and transmission projects by two of its subsidiaries, Lunzua Power Company and Lusitu Transmission and Distribution Company.
“Exergy, an Africa-focused integrated energy investor, and Mercuria, a global energy and commodities group, have signed a US$250 million financing deal in Lusaka, marking one of the largest private capital commitments to Zambia’s power sector and Mercuria’s entry into the region’s power market. Subject to regulatory approvals, the funds will finance generation and transmission projects by two Exergy subsidiaries, Lunzua Power Company and Lusitu Transmission and Distribution Company, several of which are already underway,” the statement read.
Exergy operates across the power value chain through three subsidiaries, namely Lunzua Power in generation, Lusitu Transmission and Distribution in transmission, and Kanona in trading and balancing. It actively trades in the Southern African power market and is developing several infrastructure projects, including a transmission highway linking Zambia to the East African power market.
According to Exergy, the pipeline of projects will contribute to Zambia’s target of 10,000 MW of supply by 2031.
“Through its subsidiaries, it’s pipeline will contribute to Zambia’s target of 10,000 MW of supply by 2031, a central pillar of the Grow Zambia agenda, and to the reliable supply needed by mining, agriculture, manufacturing, tourism, and industry.”
At a regional scale, Exergy said its trading and cross-border ambitions support Mission 300, the World Bank and African Development Bank initiative to connect 300 million Africans to electricity by 2030.
The group had described the deal as a signal of confidence in Zambia, the region, and in the ability of global partners to finance African energy at scale on commercial terms.
“With every target of the Grow Zambia agenda dependent on power,” the company said, “it [Exergy] is positioned to help ensure that the country’s past energy troubles are not repeated and to lead the development of a self-sustaining power ecosystem.”
And Mercuria said it is pleased to play its part in resolving the power infrastructure bottlenecks that have traditionally hindered Africa’s growth.
“Zambia’s stability, growth plan and regional position underpinned its [Mercuria] decision to commit long term capital, and it is pleased to play its part in resolving the power infrastructure bottlenecks that have traditionally hindered Africa’s growth. In doing so, it sought power industry expertise, a disciplined team and an execution-ready project pipeline, and found all three in Exergy-a scalable regional platform it wants to help build. Mercuria sees private capital playing a critical role in developing strategic energy infrastructure, alongside the traditional DFI and development bank model,” read the statement.
Further, Mercuria described its commitment as extending beyond the signing to include market knowledge and analytics, trading risk management and global relationships in support of Exergy’s delivery, combining its trading capabilities with Exergy’s operational knowledge.
According to the statement, both parties credited Zambia’s power sector reforms, including open access in the electricity market, with enabling independent companies to build and grow.
Zambia’s geographical position, bordering eight countries and sitting within the Southern African Power Pool, with growing links to East and Central Africa, is contributing to the country increasingly being seen as a natural hub for regional power trade.
