China'sSinohydro Corp will start building a 750 megawatt (MW) hydro-electric power station in Zambia in December as Africa No.2 copper producer seeks to address an electricity deficit, state power company Zesco Ltd. said on Tuesday.
An electricity shortage and weaker copper prices have put pressure on Zambia's mining industry, threatening output, jobs and economic growth in the southern African nation.
The government said in August that it was planning investments worth about $4.3 billion to begin over the next 12 months meant to add 1,673 MW to the grid once completed, and the Sinohydro project would be one of them.
The Chinese firm will build the Kafue Gorge Lower Power station at an estimated cost of about $2 billion over a period of slightly more than four years, Bessie Banda, a spokeswoman for Zesco told Reuters.
The Kafue Gorge Lower Development Corporation, a special purpose vehicle, would borrow 85 percent of the financing for the project from Exim Bank of China and the government of Zambia would put up the rest of the financing as equity, Banda said.
Zesco has applied to the energy regulator to allow it to more than double the cost of electricity for all customers except mining firms to attract investors to build power plants.