Announcement of Forty Million US Dollars Electric Power Loan in Zambia on July 8, 1970

• 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 70/46 Subject: $40 million electric July 8, 1970 power loan in Zambia :l'he second stage of the Kariba hydroelectric scheme will go forward with the assistance of a World Bank loan equivalent to $40 millioo. ThP ln~n ~ill finance the foreign exchange costs of building a 600-megawatt power station at the Kariba Dam on the north bank of the Zambezi River in Zambia. In 1956 the World Bank made a loan of $80 million to help finance the first stage of Kariba, consisting of a dam across the Zambezi River, a 705-MW power station on the south bank, and a 330-kv transmission system. Subsequently, it lent • another $7.7 million for transmission expansion in Zambia. The loan announced today will be made to Kariba North Bank Company, Limited, and guaranteed by the Republic of Zambia. So that Zambia will not be required to be responsible for more than its share of the borrowings for the entire Kariba development, arrangements are being made to release Zambia from its guarantee lia- bility on a portion of the existing World Bank loans for Kariba. These arrangements have been made possible by the willingness of the Unite« Kingdom, which guaranteed the earlier loans, to assume the sole guarantee responsibility on the portion of World Bank loans subject to the release. The new loan will be for a term of 25 years, including a five-year grace period, with interest: at 7%. Kariba North Bank Ccmp~ny (KNBC) is wholly owned by the Government of Zambia. It will appoint the Central African Power Corporation (CAPC), which is jointly owned by Zambia and Southern Rhodesia, as its ag,ent for construction and will lease • the station to CAPC after it is completed. /more Bank Press Release 70/46 -2- CAPC supplies nearly all the power requirE!ments of the two countries and d~::Linl • has been increasing at an average annual rate o•f 7~%. In Zambia adequate supplies of power are vital to the economy since the copper industry, which accounts for about 40% of gross domestic product, is a very large user of power. Alternative means of providing the additional generating capacity needed for CAPC by late 1974 were consider~d, but the advantage of the project now to be financed is that it will be an addition to existing installations at Kariba, and will thus be the more economic source of power. The total cost of the new generating station is esttmated at the equivalent of $47.7 million; interest charges will be an additional $9.4 million. The Bank loan will finance the. foreign exchange costs of $40 m:J..llion including $6.4 million of interest during construction, payable in foreign currency. CAPC will finance local • currency costs of the power station, and the entire cost of expanding its trans- mission system during the next six years. , I I •